Jennifer Rowlinson | Trainee Solicitor

Holiday Pay: Foreign currency to many

There is a balance between living to work and working to live. This is why the law entitles workers in the UK to take holidays and not be at a financial loss for enjoying their well-earned rest.

The law entitles full-time workers on a five-day week to 28 days of annual paid holiday (though the employer has discretion as to include bank holidays in this annual leave or not and employers can, of course, grant employees more than the statutory minimum holiday entitlement). Part-time workers are entitled to the same level of holiday pro rata. However, self-employed workers are not entitled to any annual leave – that’s the trade-in for being your own boss.

To ensure you relax without worrying about a dwindling bank account, the law entitles you be paid an equivalent of the hours you are typically remunerated for. In its simplest terms, one week’s pay is calculated according to the type of hours a person works and how they are paid for the hours, i.e. full-time, part-time, or casual workers.

There is understandable confusion as to an individual’s holiday pay is calculated, particularly after the Employment Appeal Tribunal (EAT)’s 2014 landmark case changed how the UK calculated holiday time inclusive of overtime and commission. In Lock v British Gas Trading Limited, the EAT ruled that it is wrong for employers to only take into account basic pay when calculating how much an employee should be paid while on holiday.

To help you figure this out, the below table outlines what work is entitled to what pay:

Type of work One week of holiday pay is equal to:
Fixed hours and fixed pay

 

i.e. Full and part-time

The amount a worker gets paid for a week’s work.
Shift work with fixed hours

 

i.e. Full and part-time

The average number of weekly fixed hours a worker  worked in the previous 12 weeks at their average hourly rate.*
No fixed hours

 

i.e. Casual work

The average pay a worker got over the previous 12 weeks.*
(*If there is an unworked/unpaid week in this time period, then switch this week for the effectively 13th work week before the holiday, so there are a total of 12 working/paid weeks to calculate the average.)

These calculations mean that workers won’t miss out on the amount of commission regular overtime they make as a result on going on holiday – hard work deserves hard play and pay.

You can calculate your holiday entitlement on the government website, and note that a claim must be presented within three months’ less a day of the failure to pay correct holiday pay or last in a series of failures. However, aggrieved employees with miscalculated holiday payments outwith this timescale may be able to find potential redress in the Sheriff Court under a breach of contract claim.

Two things to note about holiday pay:

  1. Holiday pay should be paid for the time when annual leave is taken. An employer cannot include ‘rolled-up holiday pay’ as an amount for holiday pay in the hourly rate. If a current contract still includes such rolled-up pay, it needs to be re-negotiated.
  2. If you are leaving your employer, you will either be asked to use any accrued and untaken holiday, or for it to be paid to you along with your notice/redundancy payments.

If you have any queries about holiday pay, or feel as if your employer has not properly paid your entitled amount of holiday pay, please contact the Employment Team at Jackson Boyd as soon as possible. There is a strict timebar for employment claims (three months less a day from the date of termination), so the earlier you contact, the more likely you will be in presenting a valid claim. Click here to contact us online or call 0333 222 1855 to speak to a member of our specialist team.

Jennifer Rowlinson

Jennifer Rowlinson

Personal Injury Team

Jennifer is a trainee solicitor with Jackson Boyd. She commenced her traineeship with the firm in 2017.

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