Holiday Pay Solicitors
Our employment law team have considerable experience in advising individuals on the law relating to holiday pay. The law is quite complex, and therefore advice should be sought from specialist solicitors in this area.
IBB Law’s employment law team can provide a clear, pragmatic assessment of your situation and advise you on whether you are owed holiday pay. We can quickly assess the merits of your case and give you a realistic indication of whether you are likely to have a strong employment tribunal claim. Our team will guide you through the entire claims process. We will discuss your options with you, including attempting to reach a settlement with your employer or former employer where possible.
How much holiday are you entitled to each year?
The right under the Working Time Directive (WTD) is to a minimum of 4 weeks’ paid holiday (20 days for full-time employees) each year. This right was transposed into national law by the Working Time Regulations 1998 (WTR).
Whether you are a worker (employed a contract for services) or an employee (employed under a contract of employment), you will be entitled to 5.6 weeks’ statutory paid holiday in each leave year, which is equivalent to 28 days for those working full-time 5 days a week under the WTR. There are exceptions relating to seafarers, agricultural workers, the police, the armed forces and the emergency services.
Therefore, under the WTR you are entitled to additional leave of 1.6 weeks’ statutory paid holiday in each leave year than under the WTD, which is equivalent to 8 days for those working full time 5 days a week under the WTR.
If you are part-time worker or employee, you are entitled to 28 days’ holiday reduced pro rata, according to the number of days you work each week.
No minimum period of continuous service is required to qualify for statutory paid holiday.
If you are a worker or employee whose employment begins part way through a leave year has a pro rata statutory holiday entitlement for that year.
Annual leave entitlement can include public and bank holidays. There is no statutory right to take leave on a public and bank holiday on the grounds that it is a public or bank holiday or to be paid for leave on public or bank holidays.
The leave year is set by an employer and is often a calendar year (i.e. January to December) or a financial year (i.e. April to March).
How do you calculate holiday pay?
Under the WTR, you are entitled to be paid during statutory annual leave at a rate of a week’s pay for each week of leave, this calculated in accordance with the Employment Rights Act 1996 (ERA), as follows:
- for fixed hours and rates of pay, the calculation is based on basic hours
- for working irregular hours with variable pay, the average weekly pay is calculated over the last 12 weeks worked
- if there is a week where nothing was earned, add in the pay from the week before the 12thweek to bring the total up to 12.
However, the WTD requires workers to receive their normal remuneration during the 4 weeks of WTD leave. Therefore, you will be entitled to be paid for 4 weeks’ leave based on your normal remuneration under the WTD and 1.6 weeks (additional leave) in accordance with the ERA under the WTR (Bear Scotland Ltd v Fulton and another, Hertel (UK) Ltd v Woods and others and AMEC Group Ltd v Law and others).
What is the process for taking holiday?
In the absence of a relevant agreement (e.g. an employment contract), under the WTR you are required to give notice equivalent to twice the amount of leave requested. An employer may refuse to give permission under the WTR, if it gives notice of refusal equivalent to the period of leave requested.
For example, if 10 days’ leave is sought, you should give 20 days’ notice of the request and the employer would have to come back within 10 days of the request in order to refuse it.
An employer can require you to take all or any leave at specified times under the WTR, provided you are given prior notice equal to twice the period of leave stipulated. There are no explicit requirements about the form that this notice must take.
Can you carry over holiday to the next leave year?
Under the WTR, holiday may only be taken in the leave year in respect of which it is due. Additional leave (i.e. up to 8 days) may be carried forward into the next leave year in accordance with a relevant agreement.
Case law has established that workers and employees are allowed to carry over unused statutory holiday to the next leave year in the absence of any relevant agreement:
- where an employer mistakenly believes that the individual is an independent contractor and has no right to paid holiday. The employer will incur the financial consequences of the mistake (King v The Sash Window Workshop Ltd)
- where an individual has been unable to take their statutory holiday in the leave year in which it accrued because of maternity leave, the employer must allow the worker to carry it over to the following year (Merino Gomez v Continental Industrias del Caucho SA)
- where an individual has been unable to take their 4 weeks’ WTD holiday entitlement in the leave year in which it accrued because they are absent due to sick leave, the employer must allow carry over to the next leave year (NHS Leeds v Larner)
- employers are allowed to limit carry over in cases of long-term sick leave so that any holiday not used up within 18 months of the end of the leave year in which it accrued is lost (Plumb v Duncan Print Group Ltd)
- where an individual did not have an effective opportunity to take their WTD holiday entitlement and the employer cannot show that it provided sufficient information about their holiday entitlement (Max-Planck-Gesellschaft zur Forderung der Wissenschaften eV v Shimizu).
What about maternity, paternity and parental leave?
If you take statutory maternity leave, statutory paternity leave or statutory parental leave, your right to paid holiday is not affected, and your continuity of employment is preserved during these periods of leave. Therefore, you must be allowed to take your holiday entitlement before, during or after the leave year in which holiday accrues.
Can you be paid in lieu of taking holiday?
Under the WTR, statutory holiday entitlement may not be replaced by a payment in lieu, except where there has been a termination of employment. If an employer seeks to pau you in lieu, rather than allow you to take your holiday in a leave year will be breach of the WTR. This is also includes any holiday carried over from one leave year to the next leave year.
On termination of employment, you are entitled to be paid in lieu of unused statutory holiday for their current leave year. The payment is calculated in accordance with either a relevant agreement e.g. an employment contract and is commonly based on 1/260th of your annual salary. Where there is no such agreement, you will be paid in accordance with the formula in the WTR:
(A x B) − C
- A is the period of statutory leave to which the worker would have been entitled for the whole of the leave year in which employment ends
- B is the proportion of the worker’s leave year which expired before the termination date, expressed as a fraction
- C is the period of leave taken by the worker between the start of the leave year and the termination date.
The leave year runs from 1 January to 31 December and the full-time worker is entitled to 28 days holiday and leaves on 15 August, having taken 10 days’ statutory holiday: (28 x 227/365) − 10 = 7.41.
If your employment is terminated during a period of long-term sickness absence, you will be entitled to be paid accrued untaken holiday during all leave years that you were absent from work.
What is the position on rolled-up holiday pay?
The European Court of Justice has ruled that rolled-up holiday pay is technically unlawful. But sums already paid under a transparent and comprehensible rolled-up holiday arrangement could nevertheless be set-off against any claim for unpaid holiday pay (Robinson-Steele v PD Retail Services and other cases). However, that the Court of Session concluded that rolled-up holiday pay created a disincentive, and possible a barrier, to the taking of holiday (MPB Structures Ltd v Munro).
A worker who successfully claims that they have been prevented from taking holiday is entitled to just and equitable compensation under the WTR. The set-off rule would arguably not apply, and an employer might find itself having to pay twice for the worker’s holiday.
What remedies are available relating to holiday pay?
You can bring an employment tribunal claim where your employer has:
- refused to permit you to exercise your right to statutory leave under the WTR
- failed to pay you all or part of any holiday pay due under the WTR
- failed to pay you all or part of any pay in lieu of untaken holiday due on termination under the WTR
- dismissed you because you have asserted a right under the WTR, which will be automatically unfair under the ERA
- made a series of deductions of holiday pay as an unauthorised deduction from wages accrued during the current and previous leave years under the ERA. However, the Deduction from Wages (Limitation) Regulations 2014 prevents employment tribunals considering claims going back in more than 2 years from the date of the complaint relating to those deductions.
How long do you have to bring an employment tribunal claim?
An employment tribunal claim under the under the WTR and ERA relating to holiday pay must be received by a tribunal within 3 months of the complaining act (i.e. 3 months less 1 day). This can be the last act in a series of detrimental acts over a period of time. The time limit is a strict one and will only be extended in certain circumstances.
The time limit can be extended during Acas early conciliation, which must be started before the time limit has expired.
Please see our page Acas early conciliation.
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