Paid annual leave

Fiona CumingEditor's message: The right to paid annual leave comes from the Working Time Regulations, which derive from EU law. They came into force in 1998 and gave workers the legal right to a minimum period of paid holiday each year. The TUC estimates that workers gained an extra 96 million days a year of paid holiday as a result.

The four weeks’ minimum leave under EU law was boosted by the introduction of a further period of 1.6 weeks' domestic annual leave in 2007 – meaning that workers are currently entitled to at least 5.6 weeks’ holiday a year (which can include bank and public holidays), paid at their normal pay.

In recent years, a number of European Court of Justice (ECJ) decisions in relation to the operation of paid annual leave have muddied the waters for employers. Not only has the ECJ ruled that paid annual leave continues to accrue during sick leave, and can be carried over if not taken in the relevant leave year, but it has also decided that the calculation of holiday pay should be based not just on basic pay but on various other payments such as overtime and commission. However, this has left a number of important questions, including exactly how this should be worked out in practice.

In 2011, the then Government consulted about revising the Working Time Regulations to comply with ECJ decisions on the interaction between annual leave and sick leave, but no action was subsequently taken. Brexit may now provide an opportunity for the current Government to examine as a whole, and clarify for employers, the important area of workers' right to paid annual leave.

Fiona Cuming, employment law editor

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