Holiday Entitlement Guide

What is holiday entitlement? 

Whenever a new employee joins a company there needs to be an agreement for their annual leave entitlement. This information should be documented in the employee’s written statement of employment particulars given to employees by their employer or the employees’ contract of employment. A written statement of employment must be given to employees by the employer no later than two months after the start of employment – this is a legal requirement. If you have any queries regarding holiday entitlement then it would be best to seek advice from a professional HR advisor.

Statutory entitlement

Almost all workers in the UK are entitled to 5.6 weeks’ paid holiday a year and this can, at the employer’s discretion, include bank holidays. Full-time workers (working 5 days a week) must receive 28 days of paid annual leave. This is calculated by multiplying a normal working week (5 days) by the annual entitlement of 5.6 weeks.

The leave year

A lot of companies will have a set company-wide holiday year. Typically to coincide with the calendar year, January to December, or their financial year, April to March. Each company can vary, but the holiday year that applies to each employee must be stated in their written statement or contract of employment. If there is no set holiday year the leave will begin:

• on the employees’ start date for the current employer

  or

•  1 October (the anniversary of the regulations becoming law)

If a worker commences employment part way through a company’s set holiday year then their initial holiday entitlement is based on the period from their start date until the leave year ends. In most cases, an employer will calculate entitlement for a part-year pro-rata to the full year.

Public holidays

There is no statutory entitlement to paid leave for public or bank holidays. It is at the employers’ discretion as to whether they offer their employees paid leave for bank holidays. If this is the case then the policy should be stated in the employee's contract. Paid public holidays can be counted as part of the statutory

Carry over

Any holiday over four weeks (20 days for a 5 day week, 16 days for a four day week etc.) may with agreement be carried over into the following leave year. Again, any company policy regarding carry over should be detailed in the employees’ contract.

Key points

Remember to consider: 

• The law states that most workers are entitled to 5.6 weeks’ paid holiday per year – aka their statutory entitlement.
• Part-time workers are entitled a pro-rata calculation of the same amount of holiday as full-time colleagues.
• You can set the times when your employees can take their leave. For example you might choose to close the company for Christmas.
• A week of leave should allow workers to be away from work for a week - i.e. it should be the same amount of time as the working week.
• If a worker does a five-day week, he or she is entitled to 28 days leave. However, for a worker who works 6 days a week the statutory entitlement is capped at 28 days.
• If they work a three-day week, the entitlement is 16.8 days leave but this must be rounded up to the nearest half day, so 17 days in this example.
• If an employee leaves your company then they are entitled to payment for any holiday accrued but not taken
• There is no legal right to paid public holidays.
• You can count public holidays as part of the statutory requirement for 5.6 weeks of holiday.
• Additional annual leave may be agreed as part of a worker’s contract. There is no automatic right to carry over unused holiday allowance into the next holiday year. There is however a basic requirement for employees to take at least four weeks' statutory leave in a year.
• It’s important that you keep an accurate record of holiday taken by each of your employees to prove compliance with legislation and avoid disputes. To do this really easily you could use a holiday management software.
  
  

Calculating part-time holiday

Example 1

Calculating holiday allowances for part time workers can get tricky because it my need to be done in hours and depending on circumstances may involve statutory holidays.

The starting point is that part-time workers are also entitled to a minimum of 5.6 weeks of paid holiday each year.

Example 2

The complexity comes when you consider how best to deal with bank holidays.

The easy option is to give them the day off if a bank holiday falls on one of their working days. Trouble is that this favours those who work on Mondays. To prevent this inequality, many companies give their part-time employees a pro-rated bank holiday allowance.

This is calculated based on the number of hours worked, regardless of the days that are worked and irrespective of whether or not they would be bank holidays.

Let’s take an example of a company where the full-time employees get eight bank holidays, a full-time worker works five 8 hour days per week. Equalling 40 hours in total.