Holiday pay

How is my holiday pay calculated?

Normally a week’s holiday is equivalent to a week’s normal pay. However, a Contract of Employment can improve this position.

I have recently started employment and wish to take two weeks holiday soon. Can my employer refuse my request?

In the first year of employment an individual only has the right to take holiday once they have accrued it. Although this does not prevent an individual from seeking the authorisation of their employer to take more leave before they have accrued it. The accrual position is provided for in the Working Time Regulations 1998 and again the position may be improved by contractual agreement.

Usually, in the first year of employment, leave accrues at one twelfth on the first day of each month of that holiday leave year. For example, if someone is entitled to 20 holiday days in a year, and they are six months into their employment, they will have accrued 10 days holiday leave at that stage.

I have been dismissed. Can I recover my unused holiday entitlement?

You are entitled to recover your accrued but untaken statutory holiday entitlement on the termination of your employment. However, for any accrued holiday entitlement which exceeds the statutory minimum entitlement under the Working Time Regulations 1998, it will depend on the terms of the contract as to whether you will be paid this additional holiday on the termination of your employment.

If you have been denied your statutory or contractual holiday entitlement in the first instance it is advisable to raise a grievance. If the matter is not resolved by way of a grievance then the next step would be to consider bringing a claim in the employment tribunal. The claim should be presented before the end of the period of three months beginning with the date on which it is alleged that the right to holiday should have been permitted, or the date that the holiday payment should have been made.

Can my employer take money from my wages if I have used more than my holiday entitlement for the year when my employment terminates?

An employer and worker can draw up a ‘relevant agreement’ (for example, in the contract of employment) to provide that a worker will compensate the employer, whether by payment or undertaking additional work, if the annual leave taken by the employee at the date of their termination of employment, is in excess of their yearly holiday entitlement. There is no automatic right for an employer to do this.

What is rolled up holiday pay?

This is when an employer, instead of paying the worker for annual leave at the time it is taken, pays an amount to a worker’s normal hourly rate to account for their holiday entitlement. This means that when a worker takes holiday leave they are not paid for that leave, but the holiday pay is paid in part payments over the year. This has been held to be incompatible with European law and as such employers should not operate the scheme – it is unlawful. 

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