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An Update on Holidays and Holiday Pay

Spring is in the air, the Easter holidays will soon be no more than a fading memory – it’s the perfect time for most people to start planning the next big break but what rights do they have?

As a minimum, employees are entitled to 5.6 weeks’ annual leave each year.  This equates to 28 days’ holiday for someone working a 5-day week.

An employee may be entitled to additional leave under his or her contract but the 28 days of ‘statutory annual leave’ provided by the Working Time Regulations 1998 (“the Regulations”) is made up of 20 days (four weeks) to reflect the minimum entitlement under the European Working Time Directive, and an additional 8 days (1.6 weeks) to reflect the number of domestic bank holidays in a normal year.

A part-time worker is still entitled to 5.6 weeks’ annual leave but the exact number of days leave the part-time worker gets will depend upon the number of days or hours they work each week.  To calculate the entitlement for a part-time worker who works a fixed pattern, simply multiply the number of days by 5.6.   Accordingly, for a 3-day week, statutory annual leave entitlement will be 16.8 days (5.6 x 3 = 16.8).
The calculation becomes more complicated where the worker works a variable number of days each week, or variable hours each week, as entitlement will need to be worked out on a percentage basis.  A useful calculator tool is, however, available on the Business Link website (http://www.businesslink.gov.uk).

No period of continuous service is required to qualify for statutory annual leave. However, during the first year, statutory annual leave is accrued at the rate of 1/12th of the annual entitlement each month (with fractions of a day rounded up to a half day or day).  This provision was included in the Regulations to stop a new employee taking his or her entire statutory annual leave entitlement during the first few weeks of his or her employment or prevent an employer denying any holiday during the first, say, 6 months. The only other time the accrual principle applies is in the final year when payment in respect of untaken statutory annual leave is calculated.

When holiday can be taken

The minimum notice that must be given of intention to take statutory annual leave is twice the period of leave that is being requested.  For example, someone wishing to take one week’s holiday must give two weeks’ notice.

An employer may refuse a request but, to do so, they must inform the member of staff at least as many calendar days before the leave is due to commence as the number of days leave requested.  For example, an employer choosing to refuse a request to take one week’s holiday must inform the employee at least one week before the holiday was due to start.

There is no requirement for an employer to act reasonably when considering requests for holiday, or to consult with the member of staff before turning down a request.  That said, an unreasonable refusal could potentially give rise to a constructive unfair dismissal claim or worse if the refusal is found to be tainted by discrimination.

Establishing how holiday requests will be dealt with in a policy or in clauses in employment contracts, and sticking to those procedures, should help to minimise those risks.  Additionally, having such a procedure in place allows the employer to create its own rules dictating when holiday can and cannot be taken including specifying how much notice a worker is required to give when making a request for annual leave and setting limitations on absences.  The latter can be particularly valuable if a business needs ‘all hands on deck’ at certain times of year or if a business needs to shut down, say, during the summer or at Christmas or if an employee has accrued but unused holiday when they hand in their notice.

The most common approach to dealing with holiday requests is to set a maximum number of employees who can take leave at any one time and to agree requests on a ‘first come, first served’ basis.  However, employers should be wary of applying a blanket policy. There needs to be room to exercise discretion and special circumstances should always be considered before a request is refused just to make sure that other rights aren’t being overridden. 

Time off for the Olympic and Paralympic Games

One such special circumstance might be the Games this summer.  ACAS has recently issued guidance in relation to this, which suggests that employers should establish a special policy for dealing with requests during this period.  A simple ‘first come, first served’ process is recommended, however, the guidance suggests that employers may wish to make exceptions for any employees who are chosen as official ‘games makers’ (volunteers).

Employees have no right to take time off for volunteering.  It will be up to the employer to decide whether to allow an employee who makes such a request paid or unpaid leave, or neither, in which case the employee will need to use his or her usual annual leave if he or she wants to participate.  The key is to ensure that all requests are dealt with fairly to avoid accusations of favouritism from other members of the workforce.

Carrying holiday forward

A more common problem is staff not using their full annual entitlement.  Although the Regulations expressly prohibit workers from carrying over statutory annual leave from one leave year into the next, this absolute prohibition has been eroded in recent years, particularly in the case of those who are prevented from taking statutory annual leave by sickness absence.

Following the decision of the House of Lords in Stringer v HM Revenue & Customs Commissioners [2009] the law has been that when a worker is unable to take his or her leave as a result of sickness they are entitled to carry over their entitlement from one leave year into the next.

However, the position changed slightly when the Employment Appeal Tribunal (“the EAT”) decided, in Fraser v South West London St George’s Mental Health Trust [2010], that if a sick worker wishes to defer any untaken statutory annual leave from one leave year to another, he or she must make a request to his or her employer to do so.  As Mrs Fraser had not made such a request, the EAT decided that she had lost her right to payment in respect of some of her accrued but untaken leave and that, on the termination of her employment, she was only entitled to payment in respect of untaken statutory annual leave accrued in her final leave year.

Unfortunately, in the case of NHS Leeds v Larner [2010] the EAT decided, in contrast to Fraser, that a sick worker’s untaken statutory annual leave entitlement carried over to the following leave year regardless of whether a request had been made to treat the leave in that way. 
The Larner decision is currently being appealed and, while the position remains unclear, it is probably still safest for employers to allow workers who are unable to take statutory annual leave because of sickness absence, to carry over any untaken statutory annual leave to be taken as soon as practicable in the next leave year.  In all other circumstances, including with regard to contractual annual leave (unless the contract specifically permits it), carry over can most likely be denied.

Bank holidays 2012

The increase in statutory annual leave entitlement from four weeks to 5.6 weeks was intended to address the fact that the Regulations do not provide a specific entitlement to public holidays. This had meant that many employers counted the eight annual public holidays in a normal year as part of the then four-week annual leave entitlement.

Despite the increase, there is still no statutory right to leave (paid or otherwise) on any public holiday.  Where there is a contractual provision allowing (or requiring) workers to take annual leave on public holidays, these may count against the statutory annual leave entitlement of 5.6 weeks.  In the absence of such a contractual provision, whether workers are allowed to take annual leave on a public holiday will be at the employer’s discretion.

This year an extra bank holiday has been announced for 5 June 2012 to mark the Queen’s Diamond Jubilee.  Whether the extra bank holiday entitles a worker to an additional day’s leave will be similarly dependant on his or her contract.

If the contract states that annual leave entitlement is a certain number of days plus bank holidays, staff will be entitled to the additional day’s leave.  However, if the contract states that employees are entitled to a certain number of days yet is silent on the issue of bank holidays, they will not automatically get the day off.  Contracts which state that holiday entitlement is a certain number of days “plus eight bank holidays”, or which specify exactly which bank holidays are included within the entitlement, will not be given an additional day’s leave for the Jubilee either.
Employers can always decide to give extra days as a gesture of goodwill but not all will adopt this approach particularly in the current economic climate and an employee will not be able to force his or her employer to do so no matter how unfair that might seem.

About the author

Published: Wednesday 11th April 2012
Categorised: Education, Employment

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