We’re all going on a Summer Holiday… an Employers’ guide to Holiday Entitlement

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Holidays should be relaxing…for the employer as well as the employee. Here are some important tips to ensure your business doesn’t suffer stress! All employees are entitled to receive paid annual leave. For Full-time workers this is a minimum of 5.6 weeks (28 days). Part-time workers are entitled pro-rata eg 22.4 days for an employee who works four days per week. To qualify for annual leave an employee needs to be classed as a worker. This means that if the individual is self-employed, they have no statutory right to paid annual leave. Here are some frequently asked questions: Public and bank holidays? There is no statutory right to paid leave on bank and public holidays, nor is there an automatic right to an enhanced pay rate for working on a bank holiday (what is paid is dependant upon the contract of employment). If you choose to give paid leave on a bank or public holidays, these days count towards the minimum holiday entitlement. However, if full time workers receive bank holidays then part-time workers are entitled pro rata, even if the bank holiday does not fall on their usual working day. There are eight permanent bank and public holidays in England and Wales (nine in Scotland and ten in Northern Ireland). Employees with casual or irregular working patterns? It is easiest to calculate their holiday entitlement from hours. They accrue holiday as 12.07% of the hours worked which is calculated by dividing the full-time entitlement ( 5.6 weeks) by the remaining time in the year (46.4 weeks). As a guide, remember holiday entitlement is just over seven minutes for each hour worked. What about term time workers? Employees who only work during school term-time will have different holiday arrangements depending on their contract of employment. As a term-time only worker works a reduced number of weeks during the year, they accrue a pro-rata entitlement to paid leave, much like a traditional part-time worker. What happens to holiday entitlement when an employee leaves? Employees must be paid for any accrued but untaken holiday entitlement when they leave a company. However, if the employee has taken more than they have accrued the employer only has the right to make a deduction for the additional days provided agreement has been sought with the employee beforehand or there is a contractual right to make such a deduction. When does annual leave begin? New employees accrue holiday leave from day 1 of their employment. The term ‘holiday year’ is used to describe the period in which employees are expected to take their annual leave, eg 1st January to 31st December. Starting a new job part-way through a leave year gains entitlement to leave in a proportion related to the number of months left in that leave year. Can employees opt out of taking holiday? Employees must take a minimum of 28 days during the leave year. If they have holiday entitlement over and above this amount, it is the employer’s decision whether to allow holiday to be carried over to the following leave year. Employees cannot exchange any untaken statutory leave for payment. These questions illustrate why it is essential to make sure your contracts of employment are prepared specifically for your business. ‘Off the shelf’ documents are unlikely to give you the protection and assurances you need.

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