Guide

Pay: employer obligations

Paying workers holiday pay

A worker is entitled to take at least 5.6 weeks' paid annual leave.

This is equivalent to, for example:

  • 28 days for those who work five days a week
  • 16.8 days for those who work 3 days a week

Bank and public holidays

The minimum paid annual leave entitlement can include bank and public holidays - the number of these vary across the UK.

Workers have no statutory right to take a day's leave on any bank or public holiday or to higher rates of pay if they work on such days.

You must set out in an employee's written statement of employment particulars their holiday entitlement, including arrangements for bank and public holidays, and holiday pay.

Carrying over annual leave

Workers must take at least four weeks' annual leave. Any additional leave may be carried over to the following leave year where this is agreed by you and your worker.

Payment in lieu of annual leave

The only time you can make a payment in lieu for any outstanding holiday is when a worker's employment ends.

Rates of holiday pay

The rate of holiday pay is generally the normal rate for the worker. So for those workers who are paid monthly, their annual salary is divided into 12 equal payments and when they take holiday it has no effect on their pay slip.

Case law has recently determined that guaranteed and non-guaranteed overtime should be considered when calculating a worker’s statutory holiday pay. More recently, the Court of Appeal here in Northern Ireland determined that where voluntary overtime constitutes part of an employee’s 'normal working week' – this also may need to be taken into account when calculating holiday pay.

You only have to work out a special payment where your workers have varying pay rates, such as piece work. In those cases, the holiday pay will be equal to the average rate over the 12 weeks before the holiday.

Any week in which no pay was due should be replaced by the last previous week in which pay was received to bring the total to twelve.

This only applies to the statutory holiday periods. If you offer extra leave over and above the 5.6 weeks (including bank and public holidays) the rate of pay for these can be whatever is agreed with your employees.

In reality, holiday pay, like normal pay, is dictated by market rates. If you offer less annual leave and lower rates of pay than your competitors, you may find it difficult to recruit and/or retain the best workers.

Rolled-up holiday pay

It's unlawful not to pay a worker while they are on holiday and instead include an amount for holiday pay in the hourly rate of pay - something known as 'rolled-up holiday pay'.

You must always pay a worker their normal pay while they are actually taking their leave.