As we approach the final quarter of 2024, and the end of the annual leave year for most employers, we have put together a few of this year’s FAQs around annual leave.
Staff have not been using their leave during the year, and I’m anticipating a few requests all at the same time. How is it best to manage this?
Send out a polite reminder that staff need to make their requests as soon as possible and that you will be approving requests for annual leave on a first come first served basis.
Employees should be using their leave up during the year, but for various reasons we know this doesn’t always happen. In which case, you can agree that an employee can carry over leave to the next holiday year, but they are not entitled to be paid for any leave that they haven’t taken.
Can I force staff to use up their leave?
Yes, if staff are not booking leave, then to be sure they take the leave they are entitled to, you can give staff notice to use up their leave at a time to suit you. Many employers will have this covered in their employee handbooks or written into their contracts of employment.
Most employers will already instruct employees to take a days’ leave on a bank holiday or during the Christmas shutdown period. The Working Time Directive also allows for employers to give staff notice to take leave, the notice being double the period of time you want an employee to take off (for example 2 weeks’ notice to use up 1 weeks’ leave.)
What happens when employment terminates, and the employee hasn’t used up all their annual leave?
Staff should be paid in lieu of any outstanding holidays, unless you have stated in their contract of employment that you reserve the right to tell your employee that they must use their holidays up during their notice period.
When an employee leaves and is paid in lieu of their notice period, when does leave accrue up to?
If their contract of employment states that you reserve the right to pay in lieu of notice, then leave accrues up to their last day of service. If the contract does not expressly state that you reserve the right to pay in lieu, then annual leave accrues up to the end of what would have been their notice period had they worked. Failing to calculate leave in this way would be a breach of contract.
Does leave accrue when an employee is off long-term sick?
Yes, annual leave continues to accrue during sickness absence, in the same way it accrues during periods of statutory leave such as maternity or adoption leave etc. If an employee has been unable to use leave because they have been off long-term sick then they can carry over 4 weeks’ unused leave and this must be used within 18 months from the date it’s carried over.
Does leave accrue during a sabbatical?
If you are agreeing an extended period of absence for an employee, often referred to as a sabbatical, then you can stipulate that annual leave will not accrue during this period of absence.
How do we prevent employees leaving and owing us holiday pay and if they do, how do we recoup the monies owed?
The only way to prevent staff leaving and owing you money is by not agreeing to requests to take paid annual leave before it is accrued. If you do allow leave to be taken in advance of it being accrued and the employee then leaves, then having a clause in your contracts of employment which gives you the right to claw the money back means you can make a deduction from their final pay (even if the wage then falls below NMW.) The only problem is, if the employee times their resignation so that there’s no pay for you to claw back from. In which case the only option is to write and ask them to repay the amount owed. If they refuse, it’s more than likely not going to be worth pursuing through the courts, but you can refuse to provide an employment reference.
How do I calculate holiday pay for staff who work variable hours or overtime?
You will need to calculate an average week’s pay based on the weekly hours worked and their earnings in the previous 52-week period (excluding weeks not worked.)
What is rolled up holiday pay?
Rolled up holiday pay is an administratively simple way of processing holiday pay for casual workers who work irregular hours and is paid as a percentage uplift on their hourly rate.
Generally, the uplift is 12.07% which equates to 5.6 working weeks per annum and is paid as the employee works, so that when leave is taken the time off is unpaid. It must be made clear on the contract of employment/terms of hire that holiday pay will be processed in this way and itemised separately on the payslip.
How do I calculate holiday entitlement for part time staff?
Part time staff are still entitled to 5.6 weeks (statutory minimum) holiday entitlement. For example:
a full timer will be entitled to 5.6 x 5 days = 28 days.
a part timer working 3 days will be entitled to 5.6 x 3 = 16.8 days.
Can I round holidays down for part time staff who are entitled to a fraction of a day?
By law you cannot round holidays down, but you can round up if you wish.
If my employees work different hours on different days, how do I calculate their holiday entitlement?
It’s advisable to calculate holiday entitlement in hours rather than days. For example:
5.6 x weekly hours worked = annual holiday entitlement in hours.