Paying workers holiday pay
Employees' entitlement to paid annual leave
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 determined that guaranteed and non-guaranteed overtime should be considered when calculating a worker's statutory holiday pay. Further, the Court of Appeal 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.
Rolled-up holiday pay
It is 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.
No fixed hours
If your workers do casual work with no normal hours, for example, on a zero-hours contract, the holiday pay of each worker will be based on the average pay they got over the previous 12 weeks.
These should be weeks in which they were paid. If they were not paid in one of those 12 weeks, because they did not work, the last paid week before that should be used to calculate their holiday pay.