Every employee is entitled to certain holidays throughout the year, and it’s important for employers to understand their obligations in providing these.

By ensuring employees are provided with the appropriate holiday entitlements, not only can businesses ensure they are complying with their statutory obligations as an employer, but also that they can ensure a happy and productive workforce.

In this article, we take an overview of holiday entitlements, including what they are, how to calculate entitlements and holiday pay.

Calculating Holiday Entitlement

In the UK, employees are entitled to 5.6 weeks of statutory paid holiday per year, regardless of whether they work full-time, part-time, or on a zero-hours contract.  The ACTUAL amount of time off will vary depending on the employee’s working hours and working pattern, as well as any contractual agreements that have been made with their employer (e.g. accruing extra leave entitlement based on length of service, or getting an extra day’s holiday on your birthday).

The exact calculation can be complicated depending on the employee’s individual circumstances, but the principles are that by law, employees are entitled to 5.6 weeks’ statutory paid holiday which is usually made up of 20 days (4 weeks) + 8 days (1.6 weeks, which can be the year’s normal bank holidays). The employee’s contract will state whether the bank holidays are part of, or in addition to the 5.6 weeks. Part-time workers are still entitled to 5.6 weeks’ statutory paid holiday, just in proportion to the hours worked. This is because part-time workers cannot be treated less favourably than full-time workers.  You can work this out by the number of days you work a week x 5.6. For example, if you work 3 days a week, you’re entitled to 16.8 days’ paid holiday (3 x 5.6) a year.  If you give full-time employees more paid holiday than the legal minimum (for example, 6 weeks), then part-time employees must get the same. 

If an employee works irregular hours with an ongoing employment contract, such as:

• shift work, for example working a shift pattern of 2 weeks on and 2 weeks off
• term-time work, for example working 39 weeks a year during school term-time but being employed for the whole year
• zero-hours contracts, for example working some weeks but having the contract remain in place in the weeks where no work is carried out

…. holiday entitlement should not be affected by how many weeks an employee actually works in a year. This is because the employment contract is in place for the whole year.

Employees are entitled to a proportion of a full year’s holiday entitlement if their employment contract lasts for less than a year or ends part way through a holiday year. Finally, if the holiday entitlement calculation includes a decimal point or ‘part days’ (e.g. 11.2 days because you work 2 days a week) it’s up to the employer to determine how to use the part day. Part days cannot be rounded down but neither do they have to be rounded up to the nearest full day (unless the employer chooses to). For example, an employee could leave early or come in late to use the part day, if this is agreed with the employer.

There is an online tool on the Government’s website for calculating holiday entitlements.

Calculating Holiday Pay

In addition to providing employees with a certain amount of holiday time, employers are also required to provide their employees with holiday pay.

For Those With Set Working Hours: Whenever staff take holiday who work set hours, they should receive the same salary as when they’re on duty – regardless of their usual working hours.

If your work schedule remains constant (full-time or part-time) then your holiday pay will be calculated using your standard wage rate. For example, if you regularly put in 37 hours per week and get paid £400 weekly, but happen to go away for a full week – that’s still £400 coming straight into your pocket!

For Those On No Fixed Hours: For those without a regular work schedule, your holiday pay will be determined by the average salary received over the prior 52 weeks.

Overtime, commissions & bonuses: The law on including overtime, commission and bonus payments in your paid holiday entitlement is dictated by the EU Working Time Directive, which states you must receive a minimum of 4 weeks’ worth of these added benefits.

However, some employers may choose to extend this provision and include them within your full 5.6 weeks annual leave period – though there is no requirement for them to do so. If you usually get remunerated with extra income via overtime rates or bonuses, make sure that it’s all included during at least four weeks of holiday pay!

It is essential that you are compensated for any holiday time taken. Be aware that your employer may attempt to add an extra amount onto your hourly wage throughout the year in order to pay for holidays – this so-called ‘rolled-up’ holiday pay should not be allowed and must be rejected.

What You Need To Know

Employees have the right to 5.6 weeks of statutory paid holiday per year, regardless of whether they work full-time, part-time, or on a zero-hours contract

In the workplace today, employees have the right to 5.6 weeks of paid holidays annually.

Whether you are a full-time, part-time or zero-hours contract employee, it is now enshrined into law that we all deserve a minimum number of days off with pay.

This statutory leave is important for our physical, mental and emotional wellbeing as taking regular breaks from work helps to protect our health while giving us an opportunity to recharge and come back feeling productive and focused.

Employers have a responsibility to ensure their employees have the autonomy to take all their statutory holiday time without any boundaries or restrictions. It is this recognition of employee rights that will help create an even more positive working environment.

Part-time workers must receive the same holiday entitlement as full-time employees

One of the biggest issues facing part-time workers is a lack of access to the same benefits afforded to full-time staff.

Holiday entitlements are a key benefit that should be provided equally regardless of whether staff are employed on a part-time basis or not.

Ensuring part-time employees receive the same holiday allowance and leave rights is an important step towards protecting their employment rights and providing a level playing field when it comes to job opportunities.

This helps create an environment of job satisfaction and adds further incentive for part-time employees, who often contribute just as much as their full-time counterparts. Additionally, offering equal holiday entitlement demonstrates fairness in providing rewards and recognition for all staff members.

Irregular hours/term-time workers and those on zero-hours contracts are still entitled to 5.6 weeks of statutory paid holiday in proportion to their hours worked.

Everyone deserves a break, no matter whether they work regular hours or irregular hours.

Thankfully, those who are working part-time or on zero-hours contracts are still entitled to 5.6 weeks of statutory paid holiday as long as the holidays taken are correlated with the number of hours worked.

This is hugely important for those who might need additional time off or find it difficult to allocate holidays in a set pattern in order to interact with their families and relax from work-related stress. Furthermore, by encouraging people to take holidays, the UK government recognises that a sense of wellbeing, both at home and at work, can make for a much healthier population, both physically and mentally.

Pay for holiday should be the same as when working, and if overtime/commission/bonuses are paid, these must be included in at least 4 weeks of paid holiday

We all need a break every now and then to reboot ourselves and keep up with our personal goals.

Most of us do this in the form of taking holidays, but for many of us, the funds for these trips come from our salaries. Therefore, it is imperative that when planning a holiday there should be an assurance that our salary remains constant, even if we are taking a few weeks off from work.

Additionally, any bonuses or extra incentives offered to workers such as overtime or commission-based pay must be taken into account by employers during the holiday period.

To avoid financial stress during or after breaks, there should be at least four weeks of paid leave given to workers which encompass not only their usual salaries but also any additional benefits they receive from work. This will make sure that to have stress-free holidays everyone can enjoy thoroughly.

There are potential changes in the pipeline due to two landmark Employment Tribunal cases which may affect how holidays are calculated and pay for holidays received.

With the recent Employment Tribunal cases providing helpful guidance in regards to holiday pay, there are potential changes on the horizon affecting how holidays are calculated and what employees receive for taking paid leave.

These decisions have enabled employers to gain clarity regarding uncertain areas and adjust their policies in light of these decisions, helping them work together more effectively with their staff.

It is important that businesses remain up-to-date on new developments and strive to ensure they are compliant with the latest legislation relating to holiday pay, which could help prevent costly disputes or tribunal proceedings.

Knowing that the potential changes may affect their rights, employees should make sure they understand what constitutes proper payment for holidays taken and stay informed in order to protect themselves from any future issues.

Future Changes in Regulations

There are currently two landmark Employment Tribunal cases underway which could potentially affect how holiday pay is calculated and how much pay is received for time spent on holiday:

Harpur Trust v Brazel and Bear Scotland Ltd v Fulton (and related appeals)

As these cases are still ongoing so it is difficult to predict what changes may come about as a result; however, they could potentially redefine our understanding of ‘normal remuneration’ when calculating payments due on statutory holiday entitlements.

It is also worth noting that the Government has outlined its intention to review all retained EU law by the end of December 2023 (although this deadline may well be extended). Therefore,  Regulations may change dramatically, or not at all regardless of the ET cases referred to above.

As such, employers should continue to keep up to date with any changes in the law and make sure their employees are informed of any new developments.

Keeping up with changes in legislation is important not only for employers but also for individuals, who should ensure they know their rights when it comes to taking holidays and what payment they will receive for doing so.

If you need further information and support on holiday entitlements. Make sure to reach out to the team.