Holiday entitlement and holiday pay

What should be included in holiday pay?

Recent cases have set a number of legal precedents, the main gist of these is that if a particular pay element is ‘normal’ it should be factored into holiday pay, or at least to the first 4 weeks in any given year. What is ‘normal pay’? If you normally pay commission, you should include average commission into holiday pay. If you normally pay an allowance, you should include it in holiday pay, even if the person is not doing the thing that the allowance is for when they are on holiday. If you normally pay overtime, you should include average overtime in holiday pay. Considering that last point what does paying overtime ‘normally’ mean?

There is no case law, yet, to define that, so our rule of thumb is that if over a period of time a person earns overtime more than just occasionally, it will be likely that overtime is ‘normal’. This is quite a complex topic, and you can read more about holiday pay and recent cases by clicking here.

I am not sure that all of my existing staff are legal to work in the UK. How can I check?

One or two things you MUST be aware of:

If you carry out an audit, audit ALL of your employees, or a truly random sample if you have to too many to do all. DO NOT single out groups you think may be more likely to be illegally working or you could be vulnerable to discrimination claims.
Securely keep all information you gain from the audit. This will form part of your due diligence defence if you are challenged in the future.
Rigorously check all future new employee’s documents prior to employing them to ensure they are eligible to work in the UK.

Please contact us to discuss your HR needs or phone 01628 820515.

How do I calculate how much holiday a part-time employee is entitled to?

Assume the statutory minimum of 5.6 weeks holiday per annum, equating to 28 days for a full time person working 5 days per week.

If the person works 4 days per week the annual entitlement is 4/5 X 28 = 22.4 days paid holiday (rounded up to the nearest half or full day.)

That’s easy, but what about if a person is hourly paid and the person’s hours vary from week to week? In this case the government provides a handy calculator for working out holiday entitlement.

What happens to those workers who normally work weekends when certain bank holidays fall at a weekend i.e. Christmas?

The contract of employment should detail whether bank holidays are classed as normal working days. In the absence of a contractual term we should note that there is no automatic right to have bank holidays off, whether or not they fall on weekends. Consideration should also be given to what has happened in previous years, as this may give rise to a contractual term arising through ‘custom and practice’.

Premium & Premium Plus customers should contact us if they have queries with regard to contractual entitlement or are concerned about whether or not a custom and practice term may have arisen.

Most of my workers are casual and do not want paid time off. How do I get around this?

One potential way is to calculate how many hours they are due (see the earlier FAQ) and then schedule them to be on holiday for that number of hours.

Are all employees entitled to a holiday on a bank holiday?

No. Employees’ terms and conditions of employment do commonly include entitlement to a holiday on those days but this is not required by law. In Scotland, although bank holidays are observed in the banking and financial sector, they have less general significance; the public and business community in Scotland tend instead to observe various local and traditional days.

When are the bank holidays?

There are currently 8 permanent bank and public holidays in England and Wales and Scotland. These include Christmas Day and Good Friday which, in England, Wales and Northern Ireland, are common law holidays – they are not specified by law as bank holidays but have become customary holidays because of common observance.

for 2018:

England & Wales: 1st Jan, 30th March, 2nd April, 7th May, 28th May, 27th Aug, 25th Dec, 26th Dec

Scotland: 1st Jan, 2nd Jan, 30th March, 7th May, 28th May, 6th Aug, 30th Nov, 25th Dec, 26th Dec

What happens when bank holidays fall on a weekend?

Substitute days are customarily appointed for all UK bank and public holidays which fall on a Saturday or Sunday. For some bank holidays, these substitute days are laid down in legislation. In other cases, they are appointed by Royal Proclamation (or Proclamation by the Secretary of State for Northern Ireland). The substitute day is normally the following Monday.

Holiday entitlement and holiday pay

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Holiday entitlement and holiday pay

Do you need HR support?

We're here to help

Contact Us​

Contact Us