I get a lot of queries about holiday so I thought it might be useful to round up some common queries and misconceptions!
Can I round holiday up and down?
Yes, but you can only round it up, not down.
My employees haven’t used their holiday entitlement, can I pay them for it instead?
No, not if you offer the statutory minimum holiday entitlement of 28 days or 5.6 weeks as legally the right under the Working Time Regulations is for time off. The only time payment can be made for untaken holiday in this case is when an employee resigns, or their employment is terminated. Some contracts have clauses that entitle you to ensure that untaken holiday is taken during the notice period.
However, if you offer more than 28 days holiday (including bank holidays) then you can agree to pay for any contractual holiday over the statutory minimum of 28 days (including bank holidays).
Holiday should be managed throughout the year, even in these strange times when there has been little choice about places to go, it is still important that individuals take time off. The Government have allowed up to 4 weeks holiday to be carried into the next 2 holiday years if holiday has been unable to be taken due to Coronavirus, find out more HERE. However, whether you allow this this will come down to company policy. Some companies will have a use it or lose it approach if the employees have had plenty of opportunity to take their holiday but have chosen not to. Many companies have given notice (twice the length of the holiday they are asking them to take) for holiday to be taken or asked employees to book in a certain amount by a certain date.
How should holiday pay be calculated for those who work variable hours or do not have fixed pay?
Holiday pay should be calculated based on an average over 52 weeks (or as many weeks as you have if less). Further guidance can be found HERE.
Should overtime, bonuses and commission be included in holiday pay?
If employees are ‘regularly’ paid overtime, commission and bonuses, payments must be included in at least 4 weeks of holiday pay. Many employers include it in all weeks of pay for ease. Where pay varies due to these payments or due to variable hours/pay, you can calculate holiday pay based on a 52-week average. Further guidance can be found HERE
Should we have a holiday policy?
Yes, this is a good idea to set out company procedures on booking holiday, notice required, how much can be taken in one block and whether any carryover of holiday is allowed (other than there it cannot be taken due to sickness or maternity leave).
Part time employees and holiday
There is sometimes a misconception that if employees don’t work on a day when a bank holiday falls then they aren’t entitled to any holiday allowance for that day. This is not right! Part time employees should be given a pro rata allowance for all bank holidays based on the days/hours that they work. Otherwise, part time employees would be getting less holiday entitlement than full time employees and part-time workers are protected from being treated less favourably than equivalent full-time workers. This is covered by the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
If employees don’t work on the day that the bank holiday falls on, then they can choose to take their allowance subject to the usual approvals. If they do work on the day that the bank holiday falls on, then they take the day from their overall holiday entitlement as it includes bank holidays.
To calculate statutory holiday entitlement for part time employees who work the same number of hours each day, you can use the following formula:
5.6 (28 days) x number of working days = holiday entitlement
Tim works 3 days a week so his holiday entitlement would be:
5.6 x 3 = 16.8 so round it up to 17 days
If an employee works a different number of hours each day, it is easier to work out their entitlement in hours:
Tim works 22 hours a week so the holiday entitlement in hours would be:
5.6 x 22hrs = 123.2 hours so round up to 123.5 hours
Tim usually works on a Monday so would need to ensure that he looks at bank holiday dates and includes these on his holiday record, deducting them from his total.
If you provide more than the statutory entitlement, then ensure that you use this amount in your calculation. For example, if you provide 34 days holiday then the calculation you would use would be 1= 1 week and 0.2 = 1 day so 6.8 weeks x 3days = 20.4 days holiday or 6.8 x 22hours = 149.6hrs