Until 1998, workers in this country had no statutory right to paid holiday. Since the introduction of the Working Time Regulations (WTR), they have been entitled to a minimum of four weeks every year. A solicitor from Thompsons' Employment Rights Unit in London, summarises the law and answers some commonly asked questions.
Although workers are entitled to four weeks' holiday under the regulations, there is a question mark as to what constitutes a week. According to guidance from the government, a week's holiday equates to the same amount of time as the working week.
That means that someone working five days a week is entitled to 20 days' leave, someone working two days a week gets eight days' annual leave, and a worker on annualised hours gets 1/13th of those hours. Some workers may, of course, get more than this under the terms of their contract.
Workers cannot carry over WTR holidays from one leave year to the next, nor can employers give pay in lieu except on termination of employment.
In the absence of an agreement to the contrary, an employer can count public holidays towards the four weeks. For workers entitled to more than four weeks, the WTR rules apply only to those (first) four weeks.
Frequently asked questions
How does holiday entitlement accrue? In the first year of a job (but only in the first year), entitlement accrues by 1/12th (rounded up to the next half or whole day) at the start of each month. Someone working three days a week accrues one day's leave at the start of each month; someone working six days a week will have accrued six days' holiday by the start of the third month. The sting in the tail is that during the first year, workers can only take holiday accrued by the month they want to take it.
Employers do not have to apply these restrictive rules and many collective agreements (as well as individual contracts) contain more favourable arrangements.
What happens during maternity leave and sickness absence? The European Court of Justice recently held that WTR rights continue to accrue during maternity leave. The same principle applies to sickness absence.
What notice has to be given? The WTR allow workers (except for the first year) to take some or all of their entitlement at any time during the year. However (unless there is an agreement to the contrary), workers have to give verbal or written notice of twice the length of the planned holiday. In the same way, an employer who wants to close the workplace for 10 days over Christmas or during the summer should give 20 days' warning.
The employer can block the employee's request by giving counter-notice equal to the length of the planned holiday. For instance, if a worker gives six weeks' notice of an intention to take three weeks' leave, the employer, without giving reasons, can give the worker three weeks' notice (expiring before the holiday is due to start) that he or she cannot take it.
This means that employers, at almost the last moment, can stop workers going away. Not surprisingly, some collective agreements (and individual contracts) require the counter-notice to be given in good time after the employer receives the worker's own notice. Many also require the employer to have reasonable grounds for refusing a holiday request.
If as a result of an employer's counter notice, the worker's holiday year expires without having taken the full four weeks, the employer will be in breach of the regulations.
Workers who want to take holiday while off work due to illness or because they are on maternity leave (or any other leave for that matter) still have to give the proper notice to their employer.
How much should workers be paid? The regulations say that workers should be paid 'a week's pay' (which is net, not gross). That means that:
- those with fixed, contractual hours and pay get their basic pay (but not overtime unless it is guaranteed)
- piece workers and workers on commission, whose hours are constant but whose pay varies with the amount of work done, get their average hourly rate multiplied by normal working hours
- shift workers whose hours and pay vary in a set pattern get their average hourly rate multiplied by their average working hours
- workers who do not have normal working hours (ie a set number of contractual hours every week or month set out in their contract of employment) get their average pay (including overtime, whether guaranteed or not) over the preceding 12 weeks, excluding weeks in which they got no pay at all
Employers can 'set off' a worker's WTR holiday pay against his or her contractual pay - in other words, workers cannot get both. But if the contract provides for holiday pay in excess of 'a week's pay', then workers are entitled to the higher amount.
One contentious matter (which has been referred to the European Court of Justice) revolves around the question of 'rolled-up' pay. In a recent case (see LELR 82) the employment appeal tribunal held that:
- a contract providing for a basic wage or rate topped up by a specific sum or percentage for holiday pay, even if not paid at holiday time, complies with the regulations (courts in Scotland disagree)
- a contract that is silent or tries to exclude holiday pay or states that a rate of pay includes holiday pay without indicating or specifying how much that is does not comply with the regulations
In a recent case - Canada Life Ltd v Gray and anor (see LELR 89) - the employment appeal tribunal decided that two ex-workers were entitled to holiday pay, even though they had worked for many years without taking any.
And in Inland Revenue v Ainsworth, the EAT decided that workers on long term sick leave are entitled to four weeks' paid holiday under the regulations, even if their contractual entitlement has been exhausted.
What happens on termination of employment? Employers can only pay in lieu of holidays when someone is leaving. In that event, workers are entitled to a pro rata amount from the start of the leave year (or of employment, if a new worker) to the last day of employment, minus holiday actually taken.
If a worker takes more than his or her pro rata entitlement and then resigns or is dismissed, the employer needs an agreement to recoup or offset the 'excess' pay. If there's no agreement (whether express or implied) then there's no entitlement to a repayment.