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.

A change to the way holiday pay is calculated for workers with irregular hours will be introduced on 6 April 2020. The reference period for calculating a worker's average weekly pay will increase from 12 to 52 weeks, discarding any weeks the worker did not earn pay.

Sue Dennehy, employment law editor

New and updated

Cases on appeal

Type:

Law reports

Updated to reflect that the Court of Appeal will not hear the appeal in Awan v ICTS UK Ltd because the parties reached a settlement.
Time off over Christmas and New Year

Type:

Editor's choice

We round up our resources that will help employers manage requests for time off during the festive season, when business needs may range from requiring a certain level of cover to shutting down operations. Our resources include research on employers' arrangements for work and rest over the Christmas and New Year period, to help you benchmark your organisation.
Holiday and holiday pay

Type:

Employment law manual

Updated to include a reference to TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, in which the ECJ considered long-term sick leave and annual leave carry-over.
Holiday entitlement contract clause

Type:

Policies and documents

Updated to include information on TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, in which the European Court of Justice confirmed that, in the absence of an agreement to the contrary, holiday carry-over for workers on sick leave is limited to four weeks.
Holiday approval and carry-over contract clause

Type:

Policies and documents

Updated to include information on TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, in which the European Court of Justice confirmed that, in the absence of an agreement to the contrary, holiday carry-over for workers on sick leave is limited to four weeks.
Holiday policy

Type:

Policies and documents

Updated to include information on TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, in which the European Court of Justice confirmed that, in the absence of an agreement to the contrary, holiday carry-over for workers on sick leave is limited to four weeks.
Holiday entitlement on long-term sickness absence policy

Type:

Policies and documents

Updated to include information on TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, in which the European Court of Justice confirmed that, in the absence of an agreement to the contrary, holiday carry-over for workers on sick leave is limited to four weeks.
Long-term sick leave: Holiday carry-over limited to four weeks, confirms ECJ

Date:

21 November 2019

Type:

Law reports

In TSN v Hyvinvointialan Liitto Ry; AKT v Satamaoperaattorit Ry, the European Court of Justice (ECJ) held that, in the absence of domestic legislation or collective agreements to the contrary, workers on sick leave are not entitled to carry over any paid annual leave over and above the EU minimum of four weeks.
Policy on sporting and other special events

Type:

Policies and documents

Updated to include dates for the 2020 Olympics and the football European Championships.
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.

About this topic

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