Legal Advice · 24 March 2021

Paid holidays by law: a guide

Paid holidays by law: a guide

Employees and people with worker status have access to statutory rights such as holiday pay, maximum working hours and the National Living Wage. Let us look at the legally permitted holidays as they are a critical part of re-energising yourself (or your team) and maintaining productivity and personnel engagement.

What holidays are mandatory paid holidays?

Annual leave

All of your employees are legally entitled to a minimum of 5.6 weeks of paid annual leave. This quantity of days can include bank holidays. This totals out to a full 28 days for a full-time employee. This right to annual leave begins on day 1 of employment.

Your part-time employees are also entitled to a portion of annual leave which is related back to the quantity of days they have worked. It is to be calculated on a pro-rata basis.

  • Five-day a week employees are due a minimum 28 days’ paid annual leave.
  • Four-day week = 22.4 days’ paid annual leave.
  • Three-day week = 16.8 days’ paid annual leave.
  • Two-day week = 11.2 days’ paid annual leave.
  • One-day week = 5.6 days’ paid annual leave.
The statutory holiday entitlement is capped at 28 days. A six-day week therefore also gets a minimum of 28 days’ paid annual leave.

Do not round up partial days of holiday to the nearest half or full day.

The amount of leave that can be taken builds up monthly in advance.

Employers must ensure employees take their annual leave. There is no obligation for a company to pay wages in lieu of unused holidays unless the contract is ending.

Employees on a contract that only pays for the hours worked are also entitled to holidays calculated on a pro rata basis. It is calculated as a percentage of hours worked.

The calculation used is as follows:

  • 52 weeks less 5.6 weeks (holiday) is 46.4 weeks (working weeks)
  • 5.6 weeks divided by 46.4 weeks is 12.07%.
  • For every hour worked, the employee accrues 12.07% of an hour’s holiday and 8 hours worked equals 1 hour’s holiday.

Annual leave in relation to long term sick leave

This is a tricky area and much litigated. Employees on sick leave do still continue to accrue annual leave. If your employee falls sick before OR during annual leave they are entitled to cancel that leave and postpone it to a future date while activating their sick leave.

Employees still sick at the end of a leave year can carry over remaining annual leave into the following leave year. Case law suggests that limiting carry-over to 15 months past the end of the leave year in question. Contractual documentation should be drawn up to expressly state that or it cannot be enforced.

Employees can choose to use annual leave as sick leave but an employer may not force sick employees to use annual leave as sick leave.

This subject matter is complex and legal advice should always be obtained for annual leave and sickness absence discussions.

Annual leave during maternity leave

Female employees on their maternity leave may accrue contractual and statutory holiday. Before the commencement of maternity leave an employer can encourage, or give notice to, an employee regarding using leave entitlements prior maternity leave.

A premature birth ends annual leave and maternity leave begins. Carefully record this as your employee is still entitled to their full annual leave on return.

Annual leave from the previous leave year, including bank holidays, is automatically carried over if an employee is on maternity leave. An employer cannot pay in lieu of this.

Are paid holidays mandatory by law?

Paid holidays for your employees are mandatory. There is case law which has determined that if you have wrongly categorised a person as being self-employed, when in reality they are a worker/employee (even if mutually agreed), then they are employees. They will be entitled to holiday pay for the entire period of their engagement with your business as a worker/employee.  In these circumstances carry-over will be unlimited and, therefore, you have opened yourself up to a big claim as that person has no legal limit as to how far back they can claim for!

Rolled-up holiday pay

This phrase refers to the arrangement where an employee’s hourly rate of pay is ‘rolled-up’ to include an element referable to holiday pay. This concept was done by employers in order to avoid additional pay when the employee actually takes annual leave.

The European Court of Justice has held that rolled-up holiday pay arrangements are unlawful and contrary to the purpose of the Working Time Directive. If your business is still in the habit of using rolled-up holiday pay arrangements you should act quickly with the appropriate steps.  This must be restructured to change the employee’s holiday pay arrangements immediately for any future payments to them.

Sick leave

This is the most frequent type of absenteeism. It’s unplanned, but can be planned for a medical procedure or surgery. Some companies separate sickness from long-term sickness (4 weeks +). There is a cap to the amount of legally allowable, paid sick leave days.

Annual leave

This is well covered above in this article. It is a paid, capped arrangement.  It’s usually booked in advance, but immediate leave is permissible if the workload allows subject to company policy.

Length of service and contract details specify leave duration with the minimum legal limit stated above. Some companies (Netflix are the high profile example) have an unlimited PAID allowance for holidays, as a perk. This is common at progressive tech companies and startups and to date has good results.

Bereavement/compassionate leave

This is for the effects of death or serious illness of an employee’s loved one. It also applies if they are the victim of a traumatic event. The policies and ethics around compassionate leave are complex, so don’t hesitate to contact your H.R. legal advisor if in doubt. This is a paid leave.

Travel disruption

Unpredictable bus services, trains or other transport is common in most countries. Heavy snow, rain (floods) can also be a factor. If working from home is not feasible and these issues are serious thus making it impossible to get to the office, leave may be granted – paid or unpaid. Otherwise lateness will be covered by the company lateness policy.

Maternity, paternity and adoption leave

This is planned time off work for new children and antenatal appointments. Parental leave for males and females is now usually more equal in terms of time off versus the old fashioned 2 weeks for Dads. The length of time can be dependent on the employees’ length of service.

Witness at court/Jury duty

It usually only involves 10 days minimum but might be for a number of weeks. It is illegal to skip it. It is ethical for companies to pay employees doing their civil duty however there is no legal obligation for employers to pay. An employee can claim an allowance for loss of earnings from the court. This will not be full reimbursement of wages lost.

Sabbaticals

This is a long, voluntary break from work for rest, research, volunteering, serious care of a relative and so forth.  This is mutually agreed with employers. These can be paid, unpaid, or partially paid. It is up to the employer but it is often unpaid.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

High Streets Initiative