Annual holiday pay entitlement is a crucial aspect of employment in the UK, it ensures that workers have the right to rest and recharge whilst receiving financial compensation.
This article provides an overview of holiday pay entitlement, including how it is calculated, its application to zero-hours contracts, and the treatment of bank holidays and additional leave.
What is Annual Holiday Pay Entitlement?
Under the UK’s Working Time Regulations 1998, all workers are entitled to a minimum of 5.6 weeks of paid holiday per year. This statutory entitlement applies regardless of the type of contract you have (full-time, part-time, or zero-hours).
For full-time workers, 5.6 weeks equates to 28 days of holiday, which can include bank holidays if specified in the employment contract. Part-time and irregular hours workers are also entitled to holiday pay, but the calculation is adjusted based on the hours they work.
How is Holiday Pay Calculated?
For Full-Time Workers
For employees working a regular full-time schedule (e.g., 40 hours per week), the calculation is straightforward:
- Annual entitlement = 5.6 weeks × the number of days worked per week.
For example:
- A full-time employee working 5 days per week receives 5.6 × 5 = 28 days of annual leave.
For Part-Time Workers
Part-time workers are entitled to the same 5.6 weeks of leave, pro-rated based on the number of days they work. For instance:
- If someone works 3 days per week, their entitlement is 5.6 × 3 = 16.8 days.
For Irregular or Zero-Hours Contracts
For those on irregular hours or zero-hours contracts, holiday pay is calculated as a percentage of the hours worked. The statutory holiday entitlement is 12.07% of hours worked:
- 12.07% is derived from dividing 5.6 weeks by the total weeks in a year (52 weeks – 5.6 weeks = 46.4 working weeks; 5.6 ÷ 46.4 = 12.07%).
For example:
- If an employee works 100 hours in a month, their holiday pay entitlement for that period is 100 × 0.1207 = 12.07 hours.
Employers often include holiday pay in weekly wages for zero-hours workers, but they must clearly communicate this arrangement.
What Happens If I Have a Zero-Hours Contract?
Workers on zero-hours contracts are entitled to the same holiday rights as those with fixed hours. The main difference lies in how leave and pay are calculated:
- Holiday entitlement accrues based on the hours worked.
- Many employers choose to calculate holiday pay periodically, ensuring workers receive the correct amount.
Zero-hours workers may face challenges if holidays are not explicitly agreed upon or managed. It’s essential to maintain accurate records of hours worked to ensure proper compensation.
How Are Bank Holidays Calculated?
Bank holidays often form part of the 28-day statutory entitlement but are not guaranteed as additional leave unless stipulated in your contract. Employers can choose whether bank holidays are:
- Included in the statutory entitlement.
- Granted as additional leave on top of the 5.6 weeks.
For instance:
- A full-time employee entitled to 28 days of holiday might find that 8 of these days are allocated to cover bank holidays, leaving them with 20 days of discretionary leave.
- If a bank holiday falls on a day the employee doesn’t usually work, they might not be entitled to a day off unless their contract allows for it.
What is Extra Leave?
Extra leave refers to any additional paid holiday offered by an employer beyond the statutory minimum. This is often provided as part of a benefits package to attract and retain employees. Examples include:
- Enhanced contractual leave: Some employers offer more than 28 days of annual leave, such as 30 or 35 days.
- Service-based leave: Additional days granted based on length of service.
- Unpaid leave: While not paid, employers may allow employees to take extra days off as unpaid leave.
Employers can also provide extra leave as part of company policies for special occasions, such as birthdays, duvet days, or volunteer work.
What Happens if I Don’t Take My Holiday?
Workers are encouraged to take their full holiday entitlement within the leave year, but unused leave may be carried over under certain circumstances:
- If a worker gets 28 days’ leave, they can carry over a maximum of 8 days. (there are exceptions to this rule, for example- if workers were unable to take leave due to parental leave or sickness)
- Employers may allow additional days to roll over at their discretion.
Conclusion
Understanding your annual holiday pay entitlement is essential to ensure you take full advantage of your legal rights and make the most of your hard- earned holiday! Whether you’re a full-time employee, part-time worker, or on a zero-hours contract, the principles of fairness and statutory protection apply. If you are ever unsure, you should check your contract or chat with someone from your HR department.