All workers are entitled to paid holiday which begins to build up as soon as they start their employment. This includes casual workers who may work one day a week or are on a zero hours contract and work only when needed or when they want to.
How much paid holiday they are entitled to depends on the amount they have accrued within the standard company leave year. All workers are entitled to 28 days holiday per year including Bank Holidays. Part time workers will have their holiday calculated based on the number of days or hours they work each week or month. A worker’s entitlement is calculated based on their start date within the company’s leave year.
Irregular workers will have their paid holiday entitlement calculated based on the average number of hours they have worked during the previous 52 weeks (or as many weeks as they have worked if less than 52 weeks). Employees must take this time off as holiday and not be paid for it.
As an employer your company policy will determine whether an employee can take their holiday entitlement in advance or whether they need to have worked for enough time to have accrued the amount of holiday they want to take.
Employers cannot pay for holiday which has not been taken during the holiday year but your company policy may state that it can be carried over if not taken. The only time legislation allows an employer to pay for holiday owed is when an employee leaves. At this stage the holiday entitlement is calculated up to the leaving date and any holiday already taken deducted with the balance being paid in the final pay. Of course if an employee has taken too much holiday from their entitlement at their leaving date this can be deducted from their final pay.
Holiday during furlough
Employees who are or have been on furlough in the last year are entitled to take their holiday and be paid at their normal pay rate and not at the furlough rate. Employers were advised to encourage employees to take holiday during their furlough period as furlough could still be claimed at the prevalent rate during the holiday period and the employer would only have to pay the top up amount.
This avoids employees carrying forward 5.6 weeks of holiday into the new holiday year to add to their 5.6 weeks for the next year. I don't think an employer coming out of lockdown would be keen on paying their employee to take a further 5.6 to 11.2 weeks holiday when they just want to get the business going again.
Holiday during maternity leave
Employees on maternity leave continue to build up holiday entitlement and cannot be paid for this during their period of maternity leave as their maternity leave and maternity pay would cease. Once they have agreed a date to return to work they can also agree when they can take the holiday they have accrued. If the employee has been on maternity leave for a full year they will have 5.6 weeks of holiday to take (including Bank Holidays) if they work full time, or a pro-rata amount if they work part-time. If they have only been away for 6 months they will only have half of their holiday entitlement to take and it may be agreed that the full entitlement can be taken within the remaining six months rather than delaying their return to work.
Calculating holiday entitlement & any payment due
Part of processing payroll for employers is calculating the pay due for holiday entitlement when an employee leaves and calculating the holiday entitlement for a new employee. We also calculate holiday entitlement for workers working irregular hours so that employers know how much paid time their employees can take off as holiday. This is just one small part of how we make managing employee pay easier for the employers who outsource their payroll to us.