Mark Stevens, a solicitor at Veale Wasbrough Vizards, explains the contractual obligations employers must adhere to when dealing with employee holiday requests.
Employees and workers regularly rank their entitlement to annual leave as one of the most important benefits that they receive from their employer. Many spend a significant amount of time planning what they will do during their annual leave - whether that involves taking time off for a honeymoon or just time spent with friends and family. From an employer's perspective, however, dealing with an employee's right to annual leave can cause problems.
Employees are entitled to 5.6 weeks annual leave per year. In simple terms, this amounts to 28 days per year for those who work five days a week. A part time worker's allowance is reduced pro rata and public holidays can count towards annual leave.
For the more irregular worker, say, a shift worker, the situation is more complex. Here, an employer must calculate leave based on the average shifts worked during the 12-week period immediately prior to the requested leave period.
The law only sets the minimum and so an employer is free to offer more than statutory holiday and the extra holiday will be considered 'contractual holiday entitlement'.
Bank and public holidays
Contrary to popular myth, there is no statutory right to bank or public holidays. This is why, practically speaking, the first thing to consider is the terms laid out in the contract of employment. If, for instance, the contract says that staff are entitled to '28 days holiday plus bank or public holidays', then employees are contractually entitled to take bank or public holidays off.
In contrast, if the employee does not have a written contract, or their contract states that the employee is entitled only to 'statutory holiday', then the employee has no express legal right to bank or public holidays. If an employee under this contract wishes to take leave on a bank or public holiday, it will be a matter for discussion with the employer, as they would for any other request for leave on any other day of the year.
Of course, there is still a risk that employees may gain the right to bank or public holidays, if the business always allows them to take this time off.
Parity with full time workers extends to part-timers in terms of contractual rights to bank or public holidays, as they have a right to a pro-rated equivalent of their full time colleagues. It makes no difference if the part-time worker does not normally work on the day on which the bank or public holiday falls. An employee who works Tuesday, Wednesday, Thursday will be entitled to 3/5ths of the annual bank or public holidays occurring that year, even though they never actually work on a Monday or Friday.
How much pay?
The law says employees are entitled to a week's pay for each week of annual leave. For employees with normal, regular hours of work, this generally means their basic salary without any bonus or irregular payments taken into account.
But calculating a week's pay becomes more complicated where an employee's pay fluctuates (say where pay is linked to a shift pattern which varies). In these circumstances, holiday pay will be based on their average pay during those normal working hours over the previous 12 working weeks.
The European Court of Justice (ECJ) recently found that a salesman paid partly by regular salary and partly by commission should be paid holiday pay that includes commission.
In addition, a recent Employment Appeal Tribunal found that guaranteed overtime payments should also be taken into account when calculating holiday pay.
When the right to annual leave was first introduced, casual workers with irregular working patterns were often given 'rolled up holiday pay' (with their holiday pay included within their regular wages payments), by their employers in order to try to avoid paying an employee while they were not in work. The ECJ ruled that rolled up holiday pay is unlawful, as it means that a worker receives no pay while they were actually on holiday.
Handling holiday requests
Making holiday requests is one thing, but getting permission can be another. Where an employee wants to take holiday at an inconvenient time, an employer can serve a counter-notice on an employee to state that their holiday request cannot be accommodated. Here, the counter notice must be given at least as many calendar days before the requested leave as the number of days which the employer is refusing.
It's also possible for employers to give notice ordering an employee to use their statutory holiday on specified dates. But, as with normal holiday request refusals, this notice must be at least twice the length of the period of leave that the employee is being ordered to take.
The subject of what to do with unused holiday often arises and the default position set by the law is that unused statutory holiday expires at the end of the holiday year. This means that an employee is not entitled to carry statutory holiday over or to be paid in lieu of unused statutory holiday, although there are exceptions to this rule. In practice, employers sometimes agree that staff may carry over unused holiday into subsequent holiday years.
In general, the only time that employees should be paid for their annual leave is on the termination of their employment.
Women on maternity leave continue to accrue holiday during their leave. As a result, a woman taking her full maternity leave entitlement of 52 weeks will accrue a full year's holiday entitlement.
Employees continue to accrue statutory holiday during sickness absence, even if they are absent for the whole holiday year. This means that an employee who has exhausted their sick pay entitlement could request to take paid holiday during their sickness absence.
The ECJ has also previously ruled that a worker who becomes unfit for work during a period of their statutory leave must be entitled to reschedule the period of their planned leave that coincided with the period of their sickness.
The law on holiday entitlements is quite complex, and employers who are in any doubt should seek advice to ensure that they comply with the relevant regulations.