Annual Leave

Statutory entitlement

Almost all workers are entitled to 5.6 week’s paid annual leave per holiday year. This will usually include bank holidays, but holiday allowance may be given as a number of days and it is then for the employee to decide whether to take bank holidays as part of their annual leave. It is usual for an employer to calculate a part-time workers’ annual leave on a pro-rata basis.

There is no obligation for an employer to allow any unused annual leave to be rolled over into the next holiday year. However, an employer can exercise their discretion to allow the holiday to roll over and under whichever circumstances they want.

An employer can tell employees when to take annual leave i.e. during Christmas or bank holidays if there is a real business need for holiday to be taken during these times, but the full entitlement must be allowed to be taken each year. Likewise, an employer can restrict annual leave being taken during busier periods.

Also an employer may require an employee to provide notice before taking annual leave. This is usually at least twice as long as the requested leave, for example, in order to take 1 week off work the employee needs to give 2 weeks’ notice.

How much are you entitled to be paid whilst on annual leave?

Annual leave cannot be ‘rolled up’ into an hourly rate and paid over the course of the year. It must be paid when it is taken.

If an employee is on fixed hours per week, then the holiday pay will equal how much the employee would normally get paid.

For shift work employees, an average number of hours worked in the last 12 weeks at their average hourly rate will be paid during annual leave.

For an employee with no fixed hours, a week’s holiday pay is the average amount the worker has been paid over the previous 12 weeks.

To calculate an average hourly rate, you need to use the hours actually worked and take the average over the previous 12 weeks. If one week was unpaid then you will have to go back one week until 12 weeks’ pay has been paid.

How is annual leave calculated?

Annual leave continues to be accrued during sick leave, maternity/ paternity and adoption leave.

If you commence new employment part way through a holiday year, your entitlement will be apportioned in line with how much of the year is left.

If you leave employment part way through a year, and have accrued and unused annual leave, you are entitled to be paid for this in your final pay. In contrast, if you have taken annual leave which is greater than what you have accrued then your employer can deduct the overpayment from your final pay providing that there is a deductions clause in the signed employment contract or if the employee consents to the same.