Holiday pay rights back under the employment law spotlight as research reveals 1m UK workers miss out

AS many of us return to work after our annual summer getaway, new research has revealed that as many as one million people are being denied the full holiday pay they are entitled to by law.

It’s an employment law topic that is increasingly in the media spotlight – with the threat of mass claims gathering pace.

It’s also one that is on the rise in employment tribunal cases, both here in Leeds and across the UK, as employees seek redress and compensation from their employers in ever-increasing numbers.

The employment law research found that the majority of workers affected were those on zero hours, temporary or agency contracts.

Those working in the hospitality industry – where one-in-seven workers claimed they had no holiday pay – was the sector hardest hit.

And workers aged over 65 or over were the staff group most disadvantaged, despite a legal entitlement of 28 days paid holiday a year, or pro-rata for part-timers.

Holiday pay entitlement forms a complex strand to employment law, fraught with difficulty and uncertainty for businesses.  Yet it is important for employers to recognise and fulfil their responsibilities – otherwise they could find themselves in front of a costly employment tribunal.

To calculate holiday pay, the general rule of thumb in employment law is that an employee must be paid the same amount when they are on holiday as they are paid when they are at work, irrespective of their working pattern.

Full-time workers are entitled to a minimum of 5.6 weeks paid holiday each year including Bank Holidays, although some workers may be offered more than this in their contract of employment.  

Part-time workers are also entitled to a minimum of 5.6 weeks of paid holiday each year. The difference is this is calculated on pro-rata basis, depending on how many hours they work.

To calculate holiday leave the following formula is used:

Number of days worked per week x 5.6 = number of days paid holiday per year

There is no obligation on employers to round up leave entitlement to the nearest half day or full day, but it is important to note that employers cannot round down any part days. Instead, the fractions of days may be taken as holiday hours.

Under the latest employment laws, the holiday entitlement calculation is not an easy one for zero hours/casual workers.

Staff on zero hours contracts do not typically work the same amount of hours each week and in some weeks they may not work at all.

From an employment law perspective, the important thing to remember is that zero hours workers are still entitled to receive paid annual holiday, unless they are self-employed.

The simplest way to calculate holiday entitlement is in hours rather than days. The statutory holiday entitlement of 5.6 weeks is equal to 12.07% of the total hours worked in a year.

For example:

  • JB worked a total of 10 hours last week. 
  • The calculation would be 12.07 ÷ 100 x 6 = 1.207 hours rounded up to 1.21 hours

On the whole holiday entitlement rights include:

  • Entitlement to a minimum of 5.6 weeks paid annual leave (amounts to 28 days including bank holidays) for employees working five days a week (unless the contract of employment states otherwise);
  • Holiday entitlement accumulates from the employee’s first day of work;
  • There is no statutory right to be paid Bank or other public holidays on top of the 28 day entitlement, unless stated otherwise in the contract of employment;
  • Workers have a right to be paid their normal rate of pay whilst on annual leave;
  • The general notice period for taking leave is at least twice as long as the amount of leave an employee wishes to take, but this depends on the contract of employment;
  • For workers on maternity, paternity or adoption leave, their paid annual leave accrues throughout this period; and
  • Following termination, an employee must be paid for any accrued but untaken holiday.

This is not an exhaustive list.

Whether you are an employee or an employer, should you have any questions or concerns regarding holiday pay, or any other employment law-related issues, please do not hesitate to contact this article’s author, Solicitor Lazuna Ullah, or a member of our Employment Law team here at Milners on 0113 245 0852 or email us at hello@milnerslaw

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