It is always a burdensome subject, which can leave employers in hot water.
With the law constantly changing we have highlighted some key things to remember when calculating holiday pay:
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- Yes, it does continue to accrue during periods of sickness and maternity leave; As the employee is still an employed member of staff and their employment has not been terminated, they maintain the rights of an employee. This includes the accrual of holiday pay at the same rate as they would if they were in attendance at work (up to the statutory minimum).
- The Employee can choose to take holiday during a period of absence or leave, or at the end of such a period. If they have been incapable to taking the holiday during one leave year, it can be carried over to the following year.
- If employment is terminated after this period of leave, the holiday will still be payable in the termination payment, as with any other termination.
- If an Employee falls ill during a period of pre arranged holiday, the Employee is entitled to either continue to take the time as holiday, or to take the time as sick leave and rearrange that holiday for another time later in the holiday year, even if they are then absent until the next holiday year, as this leave will carry over.
- Holiday pay must be paid at the Employees full rate of contractual pay and not a lower rate.
- If Employees work a lot of overtime they should be paid a rate which reflects this when they are on holiday. In the 2011 case of Williams v British Airways plc, it was held that in cases such as this, basic salary should also include hours worked which are “intrinsically linked to the performance of the tasks which [the worker] is required to carry out under his contract of employment and in respect of which a monetary amount, included in the calculation of his total remuneration, is provided”.
