Legal Article - Employment Law

Paid Annual Leave Entitlement

Workers are entitled to the statutory 5.6 weeks of paid leave per year, this includes bank holidays and public holidays. If employers wish to exclude bank holidays, the entitlement becomes 4 weeks and 3 days.

This is not additional to contractual entitlements. Taking contractual paid leave in a particular leave year therefore counts against the worker’s entitlement under the Regulations.
It is at the employer’s discretion to extend contractual entitlements, but the statutory entitlement cannot be reduced. A worker is entitled to the terms in either the Regulations or their contract whichever is the most favourable to the worker.

Leave Years

This would normally be whatever has been agreed between the employer and the worker.

Where a worker starts work part way through the leave year their entitlement is proportionate to the amount of the leave year that the worker works. Correspondingly, if a worker’s employment is terminated during a leave year the entitlement is again proportionate to the part of the leave year that remains.

There is no right to leave that is not taken at the end of a leave year under these Regulations, it is at the employer’s discretion to carry over the leave or to pay employee’s for any leave not taken. The leave entitlement cannot be replaced by an “allowance in lieu” i.e. pay or extra pay replacing actual leave to which the worker is entitled, except where the employment relationship is terminated.

Part Time Employees

Workers who work less than a normal week are entitled to a proportionate part dependant on the number of days they work e.g. someone who has 4 weeks (20 days) then their proportion will be 4 x no of days worked each week. If part time worker’s working time is set in terms of hours, their annual leave might be expressed in terms of hours too e.g. someone working 24 hours a week would be entitled to 72 hours annual leave.

In relation to casual non fixed staff:

B works 10 hours in the first and second week of the month, 5  in the next and non in the next. Their rate would be worked out by the number of annualised hours they worked.  This is worked out using the following:

Firstly using the figure of 12.07% (this is the percentage of the working year that is taken by holiday entitlement, i.e.5.6 weeks / 46.5 days = 12.07) as the percentage of holiday in one year.

This is then divided by 100 and then multiplied by the number of hours worked in that week so in B’s case; 12.07/100x10 = 1.21 minutes. This will therefore be B’s accrued holiday entitlement for that week.

Over the 4 week period above B will therefore accrue the following;
Week 1: 12.07/100x10 = 1.21 minutes
Week 2: 12.07/100x10 = 1.21 minutes
Week 3: 12.07/100x5 = 0.60 minutes
Week 4: 0 minutes as no hours have been worked.

Therefore over the 4 weeks B is entitled to 3 hours holiday pay.  If B chooses to take a day as holiday then they will be paid for 3 hours. If you can roughly annualise this for the year i.e. saying they work an average of 7 hours every week then the calculation will be made easier for you, as they will accrue the same number of minutes every week i.e. 12.07/100x7=0.84 minutes which over a year equate to 44 hours.

Notice of Leave

The Regulations lay down a procedure and limits for employers and workers informing each other when leave is, and is not, to be taken, although the parties can agree their own arrangements. The Regulations say:

• An employer can require a worker to take all or any of the leave to which the worker is entitled at specified times, provided that the worker is given prior notice. The notice period should be at least twice the period of the leave to be taken e.g. if the employer wants to close for one week they should give at least two weeks’ notice to their workers

• A worker is required to give notice to the employer of when they wish to take leave. The notice period should be at least twice the period of the leave to be taken e.g. to take one day’s leave two days notice would have to be given seven days leave would require 14 days notice. This is to enable the employer time to refuse that leave if, for example, a number of other workers had also applied for leave on the same day;

• An employer may refuse the worker permission to take the leave requested. To do so, they must notify the worker within a period equivalent to the period of leave.

Payment for Annual Leave

Workers are entitled to be paid their normal pay for all leave taken. This is:

• in the case of a worker with regular working hours, what they would earn for a normal working week; where pay varies weekly/monthly due to bonuses or commission earnings, a week’s pay is calculated as an average of their previous 12 weeks earnings;

• in the case of a worker whose normal working hours vary from week to week, the average hourly rate of pay they get multiplied by an average of their normal weekly working hours over the previous 12 weeks;

• In the case of a worker with no normal working hours it is the average pay received over the previous 12 weeks.

A worker’s normal working hours are those fixed by their contract of employment. Overtime hours are excluded unless specifically included in the terms of the contract of employment. Therefore, they would not normally be included in the calculation of a weeks’ pay.
Workers are entitled to payment in lieu of leave only when their employment is terminated during a leave year, whether by the employer or worker. Unless the contract says otherwise, the amount due is calculated by using the formula (A * B) – C where:

• A is the period of leave which the worker is entitled to;
• B is the proportion of the worker’s leave year which expired before their employment ended; and
• C is the period of leave taken by the worker between the start of the leave year and the effective date of termination.

The Regulations also provide for an employer to be compensated where a worker receives more paid leave than was properly due to him/her, i.e. leave proportionate to the amount of leave year worked on termination.

Working Time Regulations Enforcement: Annual Leave

The entitlement to paid leave can be enforced by workers bringing a complaint to an Employment Tribunal. The choice of whether to seek legal redress is entirely the worker’s and they may wish not to bother, In any event a worker should try to settle a dispute through the company’s grievance procedure before going to a Tribunal.
The Tribunal can make an award of compensation to the worker and in doing so; will look at both the employer’s default in refusing to permit the exercise of the worker’s entitlement, and any loss sustained by the worker as a consequence of that default

Published: 03 Jun 2011


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