Alan McCormack | Senior Associate

Holiday Pay and Entitlement

Holiday entitlement can be a complex area of employment law and it is important to know how to make the correct calculations.

Holiday pay entitlement will vary depending on what the contract of employment states. However, employees are entitled to a minimum of 5.6 weeks of paid holiday per year. This entitlement is apportioned on a “pro rata” basis for part time staff. For full time staff, working 5 out of 7 days, this equates to 28 paid days holiday per year. It is for an employer to decide whether to give employees more than the statutory minimum but if additional holidays are stated within the contract of employment, the employee will be contractually entitled to receive this.

Holiday pay should be paid at the same rate of pay as any other working day. If a worker works irregular or variable hours, holiday pay and entitlement should be calculated based on the employee’s average pay over the course of the previous 52-weeks (known as the holiday pay reference period). It can also become trickier to calculate holiday pay when someone starts or leaves part way through a leave year.

It is particularly important to note that entitlement to holiday pay is not only limited to “employees”, but that this also extends to “workers”.  Those who are genuinely self-employed are not entitled to paid holidays.  However there has been an increasing number of cases of individuals who have been engaged on a self-employed basis by a company engaging their services, then successfully arguing at the Employment Tribunal that they meet the definition of “worker”, thus entitled to holiday pay. Employers should ensure that the people they engage are properly classified as self-employed or as workers, as the wrong classification can now lead to large pay-outs for holiday pay.

Whilst the legislation provides the minimum holiday entitlement, the contract of employment will often specify further conditions for taking leave. It is possible to include specific clauses on how public holidays may affect holiday entitlement, when an employee may take leave, and what process should be followed to request holidays.

If you are an employee and would like advice on your holiday entitlement, or are an employer and would like to discuss this area further, please get in touch with our Employment Team today.

Alan McCormack

Alan McCormack

Employment Law Team

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