Annual leave and holiday pay

Sue Dennehy Editor's message: The right to paid annual leave is set out in the Working Time Regulations, which derive from EU law. The Regulations came into force in 1998, resulting in an extra 96 million days a year of paid holiday (according to a TUC estimate).

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 rate of 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.

Sue Dennehy, employment law editor

New and updated

Cases on appeal

Type:

Law reports

Updated to reflect that the Grand Chamber of the ECHR has delivered its decision in López Ribalda and others v Spain.
Policy on sporting and other special events

Type:

Policies and documents

Updated to flag up that the rugby World Cup runs from 20 September to 2 November 2019.
Holiday and holiday pay

Type:

Employment law manual

Updated to include a reference to The Harpur Trust v Brazel, concerning the calculation of holiday pay for part-year workers.
Contract clause on holiday pay for employees

Type:

Policies and documents

Updated to include information on The Harpur Trust v Brazel, in which the Court of Appeal held that holiday pay for "part-year workers" should not be calculated on a pro rata basis.
Holiday policy

Type:

Policies and documents

Updated to include information on The Harpur Trust v Brazel, in which the Court of Appeal held that holiday pay for "part-year workers" should not be calculated on a pro rata basis.
Give workers more holiday to stimulate economic growth, report urges

Date:

12 August 2019

Type:

News

Increasing minimum holiday entitlement and wages would help solve the UK's productivity crisis and stimulate economic growth, a think tank has suggested.
Court of Appeal rules on calculation of holiday pay for term-time, zero hours workers

Date:

9 August 2019

Type:

Law reports

In The Harpur Trust v Brazel, the Court of Appeal held that holiday pay for "part-year workers" should not be calculated on a pro rata basis, but by applying the approach set out in s.224 of the Employment Rights Act 1996 and calculating average weekly remuneration over the previous 12 weeks.
Holiday pay calculation and back payments

Date:

8 August 2019

Type:

Legal guidance

Consultant editor Darren Newman looks at the latest rulings in a long line of holiday pay cases, including one with significant back-pay implications for Northern Ireland employers. He also explains why the issue of lengthy back-pay periods may not yet be completely resolved for employers in the rest of the UK.
More women miss out on paid leave than men

Date:

22 July 2019

Type:

News

One in 14 UK workers are not receiving their full legal holiday entitlement, with more women than men missing out and one million people not getting any paid holiday at all.
Holiday pay: Northern Ireland Court of Appeal refuses to limit claims for overtime non-payments

Date:

25 June 2019

Type:

Law reports

In Chief Constable of the Police Service of Northern Ireland and another v Agnew, the Northern Ireland Court of Appeal refused to limit workers' historic claims for the unlawful exclusion of overtime from holiday pay calculations.

About this topic

HR and legal information and guidance relating to annual leave and holiday pay.