The start of a new year always brings lots of queries from businesses surrounding the highly complex area of holiday and holiday pay. We thought we’d set out some of the typical questions we’re being asked currently with answers. Of course, please feel free to contact us at any time if you’d like us to talk you through the details.
What is statutory holiday?
Full time workers in England and Wales are entitled to a minimum of 28 days (or 5.6 weeks) minimum basic holiday entitlement. This includes bank holidays. This basic entitlement is usually referred to as statutory holiday.
There are eight normal public (bank) holidays in England and Wales (New Year’s Day, Good Friday, Easter Monday, Early May bank holiday, Spring bank holiday, Summer bank holiday, Christmas Day and Boxing Day). If a bank holiday is on a weekend, a ‘substitute’ weekday becomes a bank holiday, normally the following Monday.
What happens if a business needs employees to work on a public holiday? And what happens with part time workers who might be affected?
The employment contract should stipulate whether employees are meant to be available to work on bank holidays and whether they are entitled to additional pay/time off for doing so. There should be no problem in cases where the employee doesn’t want to work and the business closes/doesn’t need people to work on a bank holiday anyway. However, if the business remains open and needs employees to work, they need to be clear in the employees’ contracts what the position is.
Part-time workers are entitled to public holidays on a pro rata basis. So, a 0.5 time employee will be entitled to 14 days’ holiday (including 4 public holidays). If the organisation closes on a public holiday, and the pro-rata public holiday entitlement has been exhausted, the time off may be either unpaid leave or may be taken from the annual holiday entitlement depending on the contract of employment. Alternatively, an employer may request that part-time workers arrange to work on a different day than they would normally, depending on operational requirements and the employee’s terms and conditions of employment.
How do you calculate holiday pay for part time workers? And zero hours contracts?
A worker is entitled to one week’s normal pay for each week of holiday taken. This excludes overtime unless it is compulsory and guaranteed. So, a part time worker will receive his or her normal pro-rated weekly pay for each week they are off work.
The pay calculation for workers who work irregular hours, and whose pay varies from week to week, (such as those on zero hours contracts) is based on their overall average weekly remuneration during the previous 52 week period. If there is a week in which no work was done (and so no pay received), the calculation must take into account an earlier week. If the individual has not worked for the business for at least 52 weeks, the calculation should be made from the time they have worked. Employers should keep careful records of hours worked and allocate 0.012% of each hour for holidays.
When should I use weeks/days to calculate holiday and when should I use hours?
Normally, calculations of holiday pay are based on weeks or days, depending on the working pattern of the employee. However, the calculation of holiday pay for workers whose hours are constant but whose pay varies (for example, piece workers) is based on the average hourly rate multiplied by the normal number of working hours.
For shift workers, where both hours and pay vary, the rate is calculated by identifying the average number of hours worked each week and multiplying this by the average hourly rate.
Does Commission form part of “normal remuneration” when calculating holiday pay?
Yes, if it is usually and regularly paid. The basic idea is the worker should receive an equivalent payment when on holiday as if they were continuing to work.
Can you pay in lieu of holiday?
No, not usually. The exception is when an employee leaves mid-way through the holiday year, but still has accrued but untaken holiday at the termination date.
What happens if an employee is sick while they are on annual leave?
If an employee is off sick just before or during a period of booked holiday leave (including on a public holiday), they’re entitled to have it counted as sickness absence instead subject to the normal notification requirements. They may then be able to rebook their holiday at a later date. If it’s not possible to rebook holiday in the same holiday year, they can carry it over (up to a maximum of 20 days, unless there is an agreement between the employer and employee to carry over more).
Can employees carry over holiday?
Some of it, yes.
Contractual holiday (so, anything over the 28 days statutory minimum) can be carried over if both parties agree. Some other holiday (namely, 8 days of the 28 days statutory minimum) can also be carried over by mutual agreement (in the employment contract or another written agreement).
However, the remaining statutory minimum 20 days holiday can only be carried over in limited circumstances, such as if the employee has not been able to take holiday in the same leave year due to sickness or maternity/adoption etc leave. That is…. until covid created another exception…..(see below).
I know the government changed the rules during the covid pandemic to allow more flexibility over carrying over holiday. Could you explain this to me please?
In March 2020, it was announced that where it has not reasonably practicable for annual leave to be taken in the leave year to which it relates as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society), leave can be carried over into the following two years. Employers need to consider this element carefully in light of Government guidance. Essentially, employers need to ask themselves whether it was possible for employees to take leave during the correct year and, if not, why not, before allowing it to be carried over. Importantly, there is no automatic right so the correct test must be satisfied.
What notice needs to be given for holiday, when can a business refuse holiday and what is seen as reasonable?
The basic rule is that both an employee and an employer should give twice as long notice as the period of holiday requested by the employee or required by the employer (e.g. 10 days’ notice for a request of 5 days’ leave). Organisations are allowed to set out their own procedures regarding the length of notice required from an employee prior to booking holiday leave.
Holiday requests may be declined due to operational needs and alternative dates offered (e.g. where too many team members have already booked time off on certain dates).
The employer can only refuse the employee’s request to take annual leave where it has ‘good reason’ to do so (e.g. a rush in demand at the end of the year).
The employer should make every effort to accommodate requests for leave where possible. This obviously provides good HR practice and management reputational benefits which are more likely than not going to promote a sense of goodwill and engender feelings of trust and satisfaction amongst the workforce.
When refusing a leave request, the regulations state that an employer should do so as soon as possible before the holiday is taken.
The Regulations also permit an employer to decide (within reason) when holiday can be taken. Employers could not, for example, say that holidays can only be taken on Saturdays, but could encourage employees to take them during quieter times.
Is it too early to think about the Queen’s Platinum Jubilee?
Not at all. To commemorate the Queen’s Platinum Jubilee, the late May bank holiday is being moved, from Monday 30 May 2022 to Thursday 2 June 2022. There will be an additional bank holiday on Friday 3 June 2022, making a four-day weekend in England, Wales, Scotland and Northern Ireland.
It will depend upon the terms of their employment contract whether employees should be permitted to take this extra day off so it’s worth checking your employees’ contracts now.
Employers need to think carefully about what workforce they need to cover that period and plan ahead carefully. It’s a good idea to double check contractual terms and formulate a plan now to ensure the operational needs of the business are met and employees remain happy.
Employers should communicate clearly with employees to ensure everyone feels like they are being treated fairly. In the event of any ambiguity in the contract, you might need to come to an agreement with the workforce.
As ever, please let us know how we can help navigate you through any problems you are experiencing or if you have any queries about how we can help you with best practice – give us a call or send an email.