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Holiday Allowance

13th August, 2012

The authority for holiday entitlement is the Working Time Regulations 1998. The Regulations provide that all workers qualify for holiday entitlement regardless of their length of service but certain classes of workers are excluded, such as agricultural workers, seafarers and those working in civil aviation. Those working in jobs which conflict with the Regulations such as the police, armed forces and government bodies also cannot rely on the paid holiday provisions.

Do you know how much holiday your full-time workers are entitled to?

Under the Working Time Regulations 1998, full-time workers are entitled to 5.6 weeks of paid holiday each holiday year. Workers are entitled to be paid the rate of a week’s pay per week of holiday they take. For those working 5 days a week, holiday entitlement is equivalent to 28 days a year. This is made up of 20 days of annual leave and 8 additional days of leave which are usually used for bank holidays. These extra 8 days do not have to be used for bank holidays and some employers may use them for other times in the year, for example if they work in an industry which does not allow for time off on bank holidays.

The relevant holiday year will differ between organisations and is usually set out in the contract of employment or employee handbook. Where a worker commences employment after the beginning of the holiday year, their annual leave is calculated on a pro-rata basis. It is important to keep track of these dates because on termination of employment, workers are entitled to payment in lieu of holiday they did not take in that holiday year.

Do you know how much holiday your part-time workers are entitled to?

Part-time workers are entitled to the same holiday as full-time workers but it is calculated on a pro-rata basis. This can be reduced to reflect the number of days they work a week. The rate of pay for the annual leave of a part-time worker is also calculated on a pro-rata basis and will be determined by the number of hours and days they work each week.

Do you know how much holiday your casual workers are entitled to?

Casual workers are entitled to take holiday as well but working out how much they are entitled to can be complex. Employers may decide that they accrue holiday each month on a certain date. Where their working hours are different every week, the rate of a week’s pay will be calculated as an average of their earnings in the previous 12 working weeks. One factor to determine is whether these workers are employed on a new contract every time they work or whether they are always employed on one contract. If the latter applies, they will continue to accrue holiday even when they are not working. On termination of employment casual workers are also entitled to receive pay for the holiday which they accrued in that holiday year but did not take.

Now you know how much holiday your workers are entitled to. What are the consequences of your non-compliance?

The Regulations give workers the right to bring claims in the Employment Tribunal if they are not complied with. If employers do not provide their workers with the required amount of annual leave, do not pay them for unused holiday in the year of termination of employment or do not pay them the correct rate of pay for each week of holiday, they can face claims for compensation.

Knowing how much holiday your workers are entitled to is vital to your business. For further information or advice on holiday entitlement, please do not hesitate to contact Helen Watson on 01244 405565 or at [email protected].

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