Statutory holiday entitlement: overview

Sarah-Marie Williams of Clyde & Co begins a series of articles on statutory holiday entitlement with an overview that looks at the recent increase in holiday entitlement.

Increase in holiday entitlement

Under the Working Time Regulations 1998 (SI 1998/1833), which implement the Working Time Directive (2003/88/EC), workers have a statutory right to take a minimum amount of paid holiday. Under reg.13 of the Regulations, the right was to four weeks' annual leave. This has been increased to 5.6 weeks' holiday per year, from 1 April 2009. This increase was brought about by the Working Time (Amendment) Regulations 2007 (SI 2007/2079), which introduced a new reg.13A into the Regulations. Regulation 13A entitles workers to 1.6 weeks' statutory holiday entitlement in addition to the four-week entitlement already in place under reg.13. The 1.6-week increase was introduced in two stages: 0.8 week's leave on 1 October 2007 (making a total of 4.8 weeks) and a further 0.8 week's leave on 1 April 2009 (making a total of 5.6 weeks).

Regulation 13A does not apply where, as at 1 October 2007, the employer provided 5.6 weeks' leave, if certain conditions were met. (See Employers that, as of 1 October 2007, provide 5.6 weeks' leave in the Holiday and holiday pay section of the XpertHR employment law manual for more details.) Employees who, prior to 1 October 2007, were entitled to a minimum of four weeks' annual leave (or more), plus eight bank and public holidays, will have seen no change to their entitlement as a result of the increase in statutory holiday entitlement on 1 October 2007 and 1 April 2009.

The Government increased the entitlement to fulfil its manifesto commitment to extend the right to leave to include the equivalent of the eight bank and public holidays in England and Wales in addition to the four-week annual leave entitlement provided under the Regulations. However, there is no statutory entitlement for workers to take holiday on bank or public holidays themselves. Workers can still be required to work on bank and public holidays, depending on the terms of their contract. Where workers are required to take leave on a bank or public holiday, this can be part of the 5.6-week entitlement. The next article in this topic of the week series will look at bank holidays in more detail.

The entitlement to 5.6 weeks' leave is equivalent to 28 days' leave for workers working a five-day week. Part-time workers are entitled to 5.6 weeks' leave pro rated according to the number of days or hours worked each week. The maximum entitlement is 28 days' leave per year, regardless of how many days per week are actually worked. Therefore, a worker who does a six-day week is entitled to only 28 days' leave.

Workers

The right to paid holiday under regs.13 and 13A applies to workers, and is not limited to employees. Workers are individuals who either work under a contract of employment, or work under a contract in which they have undertaken to perform work personally for another party that is not a client or customer. Therefore independent contractors, consultants, agency workers, temporary workers and freelancers are entitled to a minimum period of holiday under the Regulations.

Payment in lieu of holiday

Employers cannot make a payment in lieu of statutory holiday entitlement except on the termination of employment. This rule applies to the four weeks' entitlement under reg.13 and the additional 1.6 weeks' entitlement under reg.13A.

Transitional provisions allowed a payment in lieu to be made in respect of the initial additional 0.8 week's leave in place from 1 October 2007. However, from 1 April 2009, payments may not be made in lieu of the additional leave (except on termination).

Carry forward

Under the Regulations, workers do not have the right to carry annual leave forward into the following leave year. However, under reg.13A(7) a relevant agreement may provide for the additional 1.6 weeks' leave to be carried forward, but into the next holiday year only. A "relevant agreement" is a legally enforceable agreement between the worker and the employer (for example, a term in the contract of employment or offer letter), or a workforce or collective agreement. (See Meaning of "relevant agreement" and "workforce agreement" in the Holiday and holiday pay section of the XpertHR employment law manual for more details.)

Annual leave years and calculating holiday entitlement

The amount of annual leave to which workers are entitled depends on when their annual leave year starts. Where the annual leave year starts on or after 1 April 2009, workers are entitled to 5.6 weeks' annual leave during the leave year. Where the leave year began after 1 April 2008, but before 1 April 2009, workers are entitled to leave calculated according to the proportion of the leave year to which the 4.8-week entitlement applies, and the proportion of the leave year to which the 5.6-week entitlement applies.

For example, if the annual leave year started on 1 January 2009, holiday entitlement is the proportion of the leave year prior to 1 April 2009 (ie one quarter) multiplied by 4.8 weeks, plus the proportion of the leave year after 1 April 2009 (ie three-quarters) multiplied by 5.6 weeks.

One quarter of 4.8 weeks is 1.2 weeks. Three quarters of 5.6 weeks is 4.2 weeks. The total is therefore 5.4 weeks' holiday.

In some cases, depending on when the annual leave year begins, the entitlement does not amount to an exact number of days. Employers can round the entitlement up but not down. (See Holiday entitlement from 1 April 2009 in the XpertHR quick reference section for more information on annual leave years and their respective leave entitlement.)

Next week's topic of the week article will look at bank holidays and will be published on 12 May.

Sarah-Marie Williams (Sarah-Marie.Williams@clydeco.com) is a solicitor at Clyde & Co LLP.

Further information on Clyde & Co LLP can be accessed at www.clydeco.com.