Qualification
In the amended regulations introduced into the Working Time Regulations an employee does not now have to have been employed for a minimum of 13 weeks continuously to qualify for holiday leave and pay. The amended regulations state that an employee qualifies immediately as does the accrual of holiday entitlement.
Both full time, part time, agency, casual, temporary employees and subcontractors working under CIS qualify.
Legislation
All employees have a statutory entitlement to 4 weeks paid holiday each year and it is accrued through the holiday year, the entitlement to take the accrued holiday falls on the first of the month thereby enabling the last months accrued amount to be taken before the end of the holiday year.
The holiday entitlement must be taken during the holiday year.
There is no entitlement to carry over holidays not taken during one holiday year into the next year, although a clause in the conditions of employment or a private agreement stating otherwise will take precedence.
A worker will still accrue holiday pay whilst they are on long term sick leave, with some exceptions. This applies even if SSP and any contractual payments have ceased. It may no longer be practical for employers to keep employees on long-term sickness absence (without pay), since they will be liable to pay four weeks' salary a year whilst the workers remain 'on the books'.
It is not permissible to roll-up holiday pay within a normal weeks pay. If an employer, for example, pays £6.40 an hour, of which £6.00 is the normal hourly rate and 40p is intended to represent holiday pay, the employee will still be entitled to four weeks holiday leave and pay at £6.40 an hour and the employer will not receive credit for the 40p payments. Under certain circumstances; employment agencies for example, and with a clause in the contract of employment explaining the payment, it is okay to make a separate payment for holidays based on the time worked over each pay period. The payment must be clearly identified as holiday pay and must be separated from any other payment made.
The law stipulates an entitlement to 'paid holiday' which is viewed as time taken off and paid for, as a result it is not permitted that employees be paid holiday pay and to not take the time off with the exception of the above example and when leaving a job. As there is no statutory entitlement for untaken holidays to be rolled over the the following holiday year any untaken holiday at the end of the holiday year is lost unless allowed by the terms and conditions of employment, and not 'paid up'.
Each employee must be notified in writing of the start date of the holiday year, which can be any date through the year. Failure to notify will allow the employee to ask for their entitlement to start from their commencement date.
Additional holiday entitlement
From October 1st 2007, by law, an employee is entitled to a total of 5.6 weeks paid holiday; 4 weeks statutory holidays plus 1.6 weeks (8 days based on a 5 day or more working week), this is being introduced in steps; up to April 2009 4 days and from April 2009 the full 8 days extra. An employee is entitled to the extra 1.6 weeks if bank holidays are unpaid when not worked or are paid at the normal rate when worked.
Although they are intended to to cover the bank holidays they can be taken at any time over the year and up to April 2009 they can be 'paid up' instead of being taken. After April 2009 they must be taken and are treated in exactly the same manner as regular holiday days.
Bank holidays
Even with the above new legislation there is no statutory obligation to give time off for a bank holiday or to pay it at a premium, they are a normal working day. This does not mean that a contract of employment can't give them in addition to the normal holiday entitlement or to pay them at a premium rate.
A bit of bank holiday history :
A bank holiday is any of several days designated as holidays by the Bank Holidays Act of 1871 and a supplementary act of 1875 for all the banks in England, Wales, Northern Ireland, and Scotland. Although these days are not statutory public holiday's, their observance is no longer limited to banks. In fact it is against the law for a bank to open on a bank holiday.
Before 1830 the Bank of England closed on approximately 40 saints days and anniversaries, but in that year the number was reduced to 18 days. In 1834 they were further reduced to four: Good Friday, May 1, November 1, and Christmas Day. By the act of 1871, the following were constituted bank holidays in England, Wales, and Ireland: Easter Monday; Whit Monday, the first Monday of August; December 26 if a weekday; and, by the act of 1875, December 27 when December 26 falls on a Sunday (i.e., the first weekday after Christmas; Boxing Day). The Bank Holiday (Ireland) Act of 1903 designated March 17, St. Patrick's Day (or, if on a Sunday, the following Monday), as a bank holiday for Ireland. In England, Wales, and Northern Ireland, Christmas Day and Good Friday are bank holidays under common law.
In Scotland, New Year's Day and the day after, Christmas Day (or, if these days fall on Sunday, the following Mondays), Good Friday, Labour Day (May 1), and the first Monday of August are bank holidays.
The act of 1871 also made it lawful for any day to be officially proclaimed a bank holiday in the United Kingdom. In the 1980s the list for England, Wales, and Northern Ireland included New Year's Day, or the first Monday in January if January 1 falls on a Saturday or Sunday; Good Friday; Easter Monday; May 1 (Labour Day), or the first Monday in May if May 1 falls on a Saturday or Sunday; the last Monday in May; the last Monday in August; Christmas Day; and Boxing Day.
Holiday pay calculation
If an employees wage is the same each time then it is a straight forward calculation of the equivalent weekly pay multiplied by the number of weeks holiday taken. You must take into account that the resultant pay may cover more than one pay period so the tax and national insurance must be calculated for each period separately and then added together.
If an employee's wage changes from period to period (excepting occasional extra hours for holiday, sickness cover etc) an average amount over the previous 12 weeks has to be used. If an employee has not worked 12 weeks then the calculation is based upon the total weeks employed. Do not include payments made for occasional overtime or bonus's or any extra payments made for bank holidays.
Termination payments
When an employee leaves they are entitled to receive a payment for the portion of accrued holiday leave they have not taken. This is calculated in exactly the same way as normal holiday pay and is paid in the final payment. Failure to make this payment would be classed as an unlawful deduction.
Overpayments
If on termination an employee has taken more paid holidays than they are entitled to the employer is not allowed to deduct the excess amount paid from the final payment unless there is a 'relevant agreement' allowing it. This is because the holiday leave and pay, when requested, was allowed and therefore agreed even though not enough had accrued to cover the period taken. As it has been agreed it can't be an overpayment and therefore no legal deduction can be made. It is irrelevant that the decision to allow was based upon the assumption that the employee would be employed for long enough in the future to accrue the taken days.
A 'relevant agreement' is any written agreement that is legally enforceable, including a collective agreement, i.e. one made with a trade union, or an agreement made with elected workplace representatives, or simply one of a number of terms and conditions set out in an employment contract. In other words, recovering 'overtaken' holiday is not a statutory right, but it can be a contractual right.
