29 May 2015

With summer holidays fast approaching, employers should ensure they are fully up to date with the legal position regarding holidays and entitlement. What are the main issues that can arise?

How many holidays are staff entitled to?

Workers (a widely defined term that extends beyond those who are employees) are entitled to 5.6 weeks’ holiday a year. Employers should encourage workers to take their leave. Remember, it is possible to offer workers more than the strict statutory entitlement (and any such leave would be governed by the terms of the contract).

How is holiday pay calculated?

This may be governed by the terms of the contract. Care is needed because there are statutory rules about the calculation of holiday pay. The rules are complex and it is worth double checking how they apply to your organisation. The way in which holiday pay is calculated depends on whether the worker has normal working hours, works shift work, or, where pay varies depending upon output.

What have the recent cases told us about holiday pay?

In short, when a worker goes on holiday (for at least 4 weeks of the annual entitlement), they should receive “normal remuneration”. “Normal remuneration” means the sums a worker normally receives for working and is likely to include overtime, commission payments and other allowances. Workers may have claims for back pay if previous holiday payments did not contain the proper amounts. This is complex and advice should be sought to ascertain and then minimise any risks.

What if a worker is off work sick but has booked holidays?

A worker cannot be on sick leave and annual leave at the same time. However, a worker can elect which leave to take (and your policies in this area should be followed). Thus, a worker who is sick may decide to cancel their annual leave and use that period as sick leave. Equally, a worker who is off sick may decide to take accrued annual leave.

What if a worker is off work sick but takes a foreign holiday?

There is no express prohibition that prevents a worker who is sick from going abroad. Employers should not automatically assume the worker is “at it”. In some cases, it may be that going abroad could aid recovery.

Can a worker carry forward unused annual leave?

Assuming the contract does not permit carrying forward annual leave (and this is something that should be checked), a worker who has been prevented from taking the “basic” 4 weeks’ annual leave because of sickness is likely to be entitled to carry forward that period of leave into, at least, the next holiday year.

Employers should check their approach to holidays and make sure all managers (and staff) are fully aware of the organisation’s rules, and the legal requirements, to ensure that they are fairly and consistently applied.