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Holidays are a protected legal right for all employees in the UK. Under the Working Time Regulations 1998 (WTR), it is the duty of every employer to ensure their employees receive their entitled paid time off.
As an employer, it’s important to understand holiday entitlements to remain compliant with employment regulations. Ensuring employees receive their correct holiday entitlement is one of your key legal obligations, so it’s crucial to take it seriously and protect your employees’ rights to paid holiday time. However, calculating the exact holiday entitlement can be complex — keep reading to learn more.
How Many Days Of Holiday Is An Employee Entitled To?
The number of holiday days an employee is entitled to depends on their employment type. A full-time employee who works 35 hours or more per week is entitled to a minimum of 5.6 weeks of holiday per year, which amounts to 28 days of paid leave.
These 28 days of paid leave are a statutory right and represent the minimum amount you owe your employees. As an employer, you can always offer more than the statutory minimum, especially if you’re looking to attract and retain talented workers in a competitive environment.
What About Holiday Entitlement For Part Time Employees?
Part-time employees are also entitled to holidays; however, their entitlement is calculated somewhat differently from that of full-time employees. While full-time employees have a set minimum holiday entitlement, a part-time employee’s holiday entitlement is calculated on a pro-rata basis.
Essentially, this means that a part-time employee’s holiday entitlement is directly related to the number of hours or days they have worked.
To calculate a part-time employee’s holiday entitlement, you can use a simple equation:
Calculation:
Days (or hours) worked per week × 5.6 = Days of holiday per year.
Example
| If an employee works 2 days per week: 2 days × 5.6 = 11.2 days of annual holiday entitlement. |
This calculation can also be based on the number of hours a part-time employee has worked, which is useful if their working hours vary throughout the year. The same concept applies to shift workers — you still owe them a certain amount of holiday entitlement, which can be calculated by multiplying their average hours worked per week by 5.6.
If an employee has irregular hours rather than standard ones, their holiday entitlement can be calculated using the following formula:
Total hours worked × 12.07% = Holiday entitlement in hours.
The 12.07% isn’t just a random number – it’s representative of the 5.6 weeks out of 46.4 working weeks that make up holiday entitlement. Using the correct equation can ensure that even if your employees don’t have a typical working pattern, they can still receive the holiday entitlements that are directly in line with the amount of hours they have worked.
As An Employer, Can I Reduce Holiday Entitlement?
An employee’s holiday entitlement cannot be reduced below the statutory minimum of 28 days (or 5.6 weeks). This right is protected by law and cannot be changed under any circumstances.
However, if you provide your employees with contractual holiday entitlement, which is additional holiday on top of the statutory minimum, this may be reduced in certain situations. You must tread carefully to ensure your actions are legal.
For example, if your business is going through a restructuring and you need to adjust an employee’s Employment Agreement to reduce their holiday entitlement, this must be done with the employee’s free and willing consent. Once you reach an agreement, you will need to update their current employment contract or draft a new one to reflect the changes.
If you’re navigating this process, it’s best to seek legal help. A legal expert can guide you through the necessary steps, ensure your employment agreements are up to date, and help ensure your actions comply with employment regulations.
How Do I Work Out Holiday Entitlement When An Employee Is Leaving The Job?
If an employee is leaving the company, they are entitled to receive pay for any unused holidays. To calculate how much pay they will receive, first determine how many days of leave they were entitled to for the current holiday year. Then, subtract the number of days they have already taken.
Once you have the final number of untaken holiday days, you can pay the employee a lump sum for those unused days, based on their normal rate of pay.
What Happens If An Employee Doesn’t Use All Their Holiday Entitlement?
Generally, if an employee does not use their holiday entitlement during the year it was intended for, they may lose those days, as there is no legal requirement for unused holiday to be carried over into the next year. However, there are exceptions to this rule, such as when employees have been on parental leave, sick leave, or furlough. In these cases, holiday entitlement continues to accrue. As such, employees may be able to carry over up to 4 weeks of their unused statutory holiday entitlement into the next holiday year. This applies to the 4 weeks of holiday from the EU Working Time Directive, while the additional 1.6 weeks of statutory leave (under UK law) cannot generally be carried over unless the employer allows it.
Holidays carried over due to illness, parental leave, or furlough must typically be used within 18 months of the end of the leave year in which it was accrued. Additionally, employees on furlough can still take holiday leave however, they must receive their full normal pay for those days, with employers topping up the difference between furlough pay and holiday pay.
If you offer contractual holiday entitlements beyond the statutory minimum, part of your agreement may allow unused holidays to be carried over to the next year. If this is the case, it’s important to clearly outline this in Employment Agreements and ensure employees are aware of their rights and the limitations surrounding their holiday entitlements.
Key Takeaways
Making sure your employees are receiving the correct holiday entitlements is an important responsibility for all employers — chatting with a legal expert can help you get advice specific to your business and employees, which is always worthwhile.
To summarise what we’ve discussed:
- Employees in the UK are entitled to 5.6 weeks (28 days) of paid holiday per year under the Working Time Regulations 1998
- Part-time employees and shift workers receive holiday on a pro-rata basis, calculated based on the hours or days worked. The formula for irregular hours is total hours worked × 12.07%
- Employers cannot reduce holiday entitlement below the statutory minimum, but contractual holidays beyond the statutory amount can be changed with employee consent
- When an employee leaves, they must be paid for any unused holiday based on the time worked during that holiday year
- Employees who miss out on holiday due to sick leave, parental leave, or furlough may carry over up to 4 weeks of statutory holiday, which generally must be used within 18 months
- Employees on furlough can still take holidays but must be paid their full normal wage for those days, with the employer covering the difference
- Employers should clearly outline any carry-over rules for contractual holiday entitlements in Employment Agreements to ensure compliance and transparency
If you would like a consultation on calculating the holiday entitlement of your employees, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.
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