An introduction to Statutory Holiday Pay

All workers are entitled to paid holidays, this includes agency workers, workers with irregular hours and workers on zero-hour contracts. A worker is entitled to be paid for statutory holiday or the unused statutory holidays which were accrued on termination of employment.

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In this article, we will explain the law applicable to statutory holidays and some relevant issues which arise in practice.

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Statutory Entitlement to Holiday

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The right to be paid for holidays is a statutory entitlement and may also be contractual. According to law, all workers are entitled to 5.6 weeks paid holiday each ‘leave year’. Leave year is a period in the contract which specifies the beginning and the end of the period you can take your holiday.

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This right to 5.6 weeks holiday consists of:

• A ‘basic entitlement’ to 4 weeks (20 days for a full time worker) according to EU law
• An ‘additional entitlement’ to 1.6 week (8 days for a full time worker) according to domestic law

Part-time workers are still entitled to the 5.6 weeks’ paid holiday, calculated on a pro rata basis depending on the number of hours they work. For example, if they work 3 days a week, they must get at least 16.8 days’ leave a year (3 × 5.6).

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If the employee/ worker has started their job in less than a year, their entitlement to holiday will be based pro rata  on the number of days/weeks/months they work. As an example, if they have worked for a month, they are entitled to 1/12th of what their entitlement is.

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How to calculate Statutory Holiday Pay?

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Under the Working Time Regulations 1998, workers are entitled to be paid at the rate of a 'week's pay' for each week of their statutory holiday. The method used to calculate the amount of payment for statutory holiday depends on the pattern of the working hours of the worker:

If the payment within normal working hours (worker normally works in each week) is not dependent on the amount of work completed, the payment of holiday would be the basic salary.  If payment of normal working hours varies according to the amount of work done (pieceworkers as an example) or the time of work (for instance where pay is dependent on varying shift patterns) the holiday pay will be calculated based on their ‘average’ pay over the previous 52 working weeks.

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Interaction with Other Holidays

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Note that if someone is on Maternity and other parental leave, their holiday will still accrue whilst on leave.

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When can employees take annual leave?

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Employees/ workers may declare their intention to take annual leave by notifying their employer in advance. An employer might require the worker to take their holiday on specific days or not to take them during certain times (for example, August for those who work in hospitality). Therefore, an employer can refuse the request for holiday by serving counter notice.

Often the notice required must be:

• twice as many days as they are requesting in advance, where the notice is to specify that leave must be taken on particular days.  As such, in order to take a week holiday, there should be a two-week notice of intention.
• As many days as the duration of the leave in advance where a leave is not to be taken on particular day.

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Note that an employer and worker may agree to other notice provisions by way of contractual agreement.

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In summary, there is a difference between entitlement to holiday and entitlement to be paid for that holiday.  In this article, we focused on the basic 5.6 weeks right to paid holiday.

We need to remember that in addition to the statutory entitlement to paid holiday, an employment contract may entitle individuals to more holidays than the basic 5.6 weeks which is also outside of the scope of this article.

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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.