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Holiday entitlement and 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?

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’.  

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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.) 

For variable hours workers many employers work out how much holiday pay is due by multiplying the average weekly pay by 12.07%. This isn’t always accurate, but it is the most common method used. 

If you’re thinking of outsourcing your HR, payroll or employment law needs, why not contact myHRdept? Call us on 01628 820515, email us at enquiries@myhrdept.co.uk to discuss your requirements, or contact us via our website and we’ll call you back.

 

 

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’.

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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. 

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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.

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There are currently 8 permanent bank and public holidays in England and Wales. 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 upcoming bank holidays for 2024, 2025 and 2026, click here :

UK bank holidays – GOV.UK (www.gov.uk)

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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.

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Employees do not automatically have the right to take additional, one-off bank holidays.

The contract of employment determines the right to take the day off;

  • where the contract entitles employees to take leave on “all bank and public holidays”, the employer will be required to grant the extra day as leave.
  • if the contract entitles the employee to a certain number of bank holidays e.g. ‘plus eight bank holidays’ or ‘the usual bank holidays,’ the employer is not contractually obliged to grant the extra day, however, it may choose to do so as a goodwill gesture.

Employers should ensure that part-time employees are not treated less favourably than full-time employees. To avoid a complaint of less favourable treatment, part-time employees must be provided with a pro-rated bank holiday entitlement on top of their pro-rated holiday entitlement.

If you’re thinking of outsourcing your HR, payroll or employment law needs, why not contact myHRdept? Call us on 01628 820515, email us at enquiries@myhrdept.co.uk to discuss your requirements, or contact us via our website and we’ll call you back.

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