The rules for holiday and holiday pay are derived from the Working Time Regulations, which case law has refined over the years. Here is a summary and an update on recent changes.
All workers are entitled to 5.6 weeks paid holiday per year. This equates to 28 days leave for full time staff which is pro rata’d for part time staff and those work who work term time.
Holiday pay is calculated using a worker’s normal pay (if their hours do not change per week) or an average of the last 12 weeks, if their hours vary. Shift workers’ holiday pay is calculated from the average number of hours worked in the previous 12 weeks.
This holiday must be taken each year unless a worker leaves employment and then it can be paid in lieu or a worker is prevented from taking holiday due to sickness. In the latter case the worker can carry the leave into the next leave year if necessary. Alternatively the worker can specify a period of sickness as annual leave and receive holiday pay for it.
A worker’s entitlement to holiday pay accrues during sick leave, maternity and shared parental leave.
Guaranteed overtime i.e. where the worker is guaranteed overtime and is obliged to work it and non-guaranteed overtime i.e. where no overtime is guaranteed but when it is the worker is obliged to work it, must be used to calculate a worker’s statutory holiday pay.
At the moment in UK there is no definitive case law on voluntary overtime i.e. overtime that is not guaranteed and the workers is not obliged to work it when offered it.
Commission should be used to calculate statutory holiday pay. These rules for holiday pay apply to the original 4 weeks holiday (not the extra 1.6 weeks) for commission and non-guaranteed overtime.
Claiming unpaid holiday pay
To make a claim for unpaid holiday a worker has to first consult ACAS and go through a procedure called Early Conciliation.
A holiday claim can only be made if
- It is brought within 3 months of the underpayment.
- If the claim is for a series of underpayments it must be made within 3 months of the last underpayment.
- There cannot be a gap of over 3 months between any of the underpayments in the series.
- From 1st July there is a 2 year cap on backdated claims
For more information see PERS Leaflet No. 4 Holiday and holiday pay on our web site.