What are workers rights to holidays?

Statutory entitlement to holiday under the Regulations represents a minimum requirement with which all employers must comply, apart from some excluded categories, such as agricultural workers. If a worker's contract is silent on the topics covered by the Regulations, the Regulations will prevail. In any event, a contract cannot give a lesser entitlement. Often contracts supplement the minimum statutory entitlement.

Workers often believe they are entitled to public holidays. In actual fact there is no statutory entitlement to public holidays in the UK apart from in the financial sector. It remains a matter of goodwill by the employer to give employees time off for public holidays in addition to their statutory annual leave entitlement, unless that is in the terms of employment or custom and practice over the years has made it a contractual right .

Who has a right to holiday?

Under the Regulations, all workers are entitled to 20 days paid annual leave in each leave year since 23 November 1999. 'Worker' is a wide definition, and will include not just those who are strictly speaking employees, but all those engaged in providing services, including the self-employed unless they are not only self-employed but are in business on their own account.

This definition is used throughout the Regulations. It thus embraces temporary and part-time workers, home workers and agency workers. To qualify a worker needs to have been employed continuously for 13 weeks, but employers should note that once a fraction of the thirteenth week has begun to be worked that will be enough.

How long is it for?

The statutory entitlement under the Regulations is now 20 days paid leave. It should be noted, however, that any contractual entitlement counts towards the statutory minimum and that if the employer can negotiate a contract on the right basis, then paid bank and public holidays can also be included in those 20 days.

How are part-timers treated?

Part-time workers will be entitled to a pro rata holiday equivalent. Thus, someone working one day a week will be entitled to four days paid leave a year. Employers should note that any fractions of a day in calculating the entitlement will be rounded up to the benefit of the worker.

What is the 'leave year'?

Under the Regulations, the 'leave year' may be agreed by the employer and the worker in a specific agreement. For example, many employers have their leave year running from 1 January each year. It is obviously advantageous from the employer's perspective to have all workers with the same leave year, thus making it easier to keep track of how much holiday entitlement workers have used and to plan for peaks and troughs of requests.

If no such agreement is in place, then the start of the leave year is either the date on which the worker's employment began or 1 October 1998, whichever is the later, and then each new leave year will begin on subsequent anniversaries of that date. When a worker commences employment mid-way through the leave year, then the holiday entitlement is pro-rated in accordance with the worker's start date and rounded up to the nearest whole day.

There are no statutory provisions for carrying the right to holiday forward from one leave year to the next. If it is not taken, it is lost, unless the contract provides otherwise.

How much must a worker be paid?

Workers have the right to be paid for the period of their minimum holiday entitlement. The rate is simply stated as being at the rate of a week's pay for each week of annual leave.

To calculate what a worker's week's pay is, it is necessary to see whether the worker has 'normal working hours'. If the worker's contract states that he must work a fixed or minimum number of hours each week then that is taken to be the normal working hours for the week. Alternatively, if a worker does not have normal working hours but works on an irregular basis then a week's pay is calculated by reference to the worker's average pay over a 12 week period, and in calculating this overtime payments are also included.

Employers will need to consider how they pay bonuses: to what period do they refer? To avoid it being part of an average over twelve weeks, a bonus system should specify how it is calculated and over what period - although there are limits on how far that can be taken.

If the worker's contract provides for more substantial holiday payments this will override the minimum statutory pay definition. There is no provision for any payments to be made in lieu of the statutory entitlement to annual leave, except on termination, and a contract cannot be used to 'buy-out' the entitlement, although it could allow it to be carried forward.

A prudent employer, wishing for a more tailored approach to holiday allocations, would be well advised to have a contractual policy which can address issues such as when the leave year commences, consider how bonuses are paid and to which period they refe

Payment in lieu of leave

There is no provision for payment in lieu of annual leave except on termination of a worker's contract. If there is no relevant agreement, holiday payment on termination is calculated according to a pre-determined formula of (A x B) - c ,where: A is the period of leave to which the worker is entitled under the Regulations, B is the proportion of the worker's leave year which expired before the effective date of termination, and C is the period of leave taken by the worker between the start of the leave year and the effective date of termination.

For example, if a worker works five days a week and leaves his employer six months into the leave year and has only taken three days leave, he will be entitled to a sum equivalent to (20 x 0.5) - 3 = 7 days leave. An employer is not automatically entitled to recover payment for any leave taken in excess of the statutory entitlement when a worker leaves. This is only possible if there is a relevant agreement which is turned to next.

Early leavers clawback

There is no obligation on the worker to compensate the employer for excess leave taken. Given this possibility, employers should protect their position and get workers to enter into an agreement as allowed by the Regulations which provide either that the worker will compensate his employer by payment, by undertaking additional work or otherwise for the additional holiday days taken. In other words, worked so as to give the employer the right to clawback any excess.

When can the leave be taken?

When a worker wishes to take leave on particular dates, the length of the notice required varies according to the amount of leave to be taken. A worker must give notice to his employer of his intention to take any leave. The notice must be issued before the holiday and be at least twice as many days in advance as the holiday itself. For example a worker who wishes to take two weeks' leave must give the employer at least four weeks' notice.

An employer can require a worker to take their annual leave on specific dates provided that the employer gives the worker advance notice which equals two times the number of days to be taken. Similarly, an employer can issue notices to employees instructing the worker not to take leave.

Where an employer has received a holiday request but does not want a worker to take leave, then the notice must then be issued in advance by the same number of days prior to the amount that the employer wishes to prohibit being taken. This allows employers the possibility of making holidays fit in with annual shutdowns and peaks and troughs.

However, such refusals must be based on a sound business need. If it was arbitrary or just unwillingness, it could both breach the contract (because it destroyed mutual trust and confidence) and/or lead to a claim that there was an attempt to deprive a worker of a statutory right. All refusals, therefore, should be objectively justifiable.

There is also a pitfall for the unwary employer which falls outside of the Regulations, depending upon the reason for the workers' requests. If the worker is seeking time off to observe a religious day and is from an ethnic or racial background to which that religious day predominantly applies, a refusal to allow time off could amount to race discrimination.

The employer could then face a claim where compensation is unlimited. An employer who wilfully persisted with a shift structure which prevented just such a group of his employees from attending a religious ceremony was held to have discriminated against them. Employers should, therefore, deal with such requests sensitively and appropriately.

Relationship with other forms of leave

If an employer provides a worker with notice that they must take a certain period off as holiday or that they cannot take a certain period off as holiday, the "family friendly" legislation recently implemented by the Government needs to be remembered. For example, irrespective of length of service a worker is entitled to 'a reasonable amount of time off' during working hours - albeit unpaid - where it is "reasonable for him or her to do so to look after a dependent". Likewise, parental and maternity leave cannot be held by the employer to constitute holiday and the worker's holiday entitlement runs in addition to these entitlements.

Remedies and Protection

A worker who has been unlawfully denied their holiday rights can bring a claim for compensation before an Employment Tribunal. If a worker suffers detrimental treatment for trying to exercise his statutory holiday rights he can again claim compensation - and an employee would be able to argue that it was an automatically unfair dismissal, irrespective of their length of service. The latter could lead to a claim in the Employment Tribunal too, with a maximum compensatory award of £50,000.

In conclusion, employers must be aware of the minimum provisions imposed in this area by the Regulations and implement them accordingly. A prudent employer, wishing for a more tailored approach to holiday allocations within their business, would be well advised to have a contractual policy which, while complying with the Regulations, can address issues such as when the leave year commences while complying with the Regulations, consider how bonuses are paid and to which period they refer, and at the very least enables a clawback of excess holiday pay on termination.