Friday, 28 June 2024 13:24

Annual Leave Rules

Now that we have had a taste of summer over the last week, and the traditional holiday season is upon us, so we thought we would go over the basic rules around holiday and annual leave. It’s been a while since we touched on this subject in the blog but staff holiday is one of the most consistent subjects we give advice about on the helpline, so perhaps you can bookmark this page for future reference.

There is a raft of legislation that governs how you must deal with staff holidays, but staff morale and productivity are equally compelling reasons to get policies and procedures correct and to do the right thing. Keeping on top of your staff’s holiday bookings, especially as we enter the more popular school holiday period, will help to avoid clashes or overlap of holidays, and also you to monitor whether staff absences leave any skills shortages in the business.

Statutory holiday, the legal minimum that employees, including part-time and most agency and free-lance workers, are entitled to, is 5.6 weeks per year. That equates to 20 days annual leave plus eight days for public holidays. We’ve had extra public holidays in the last couple of years for the Queen’s funeral and the King’s Coronation, but these are discretionary.

You can choose how you describe holiday entitlement in your staff handbook or employment contracts as either 20 days plus 8 public holidays, OR as 28 days including public holidays. We recommend the latter as it generally makes it easier to calculate holidays, especially for part-time workers, but also because in many industries such as hospitality, retail, leisure and care, employees are required to work on public holidays. By rolling annual leave entitlement up into a single figure, workers in these industries won’t miss out on any holiday.

Part time workers get a pro-rata amount of holiday measured against a standard full-time employee. For example, an employee who only works three days per week would get three fifths of the statutory amount; so 16.8 days, which we would round up to 17. You cannot round down. Note that a part time worker who worked, say, 10.00am to 2.00pm five days a week would still get the full 28 days because the time they would be absent would only be counted against their part time hours.

An anomaly of employees who work compressed hours, eg, the hours of a five day week worked in just four days, is that their annual leave seems to be reduced. In reality, their holiday is compressed also. As in the above example, someone who worked a standard 37.5 hours but over four days, taking Fridays off, would only get 22.4 days statutory leave, but these would only need to be taken against Mondays to Thursdays because the Fridays wouldn’t count.

You holiday year, the annual cycle upon which you calculate holiday, can begin at any time but it can be complicated to change. Some companies choose a standard calendar year whilst others align it with their financial year. This can also cause complications if this is around March/April owing to the variable dates that Easter falls meaning, strictly speaking, a company could have two or no Easters in the same holiday year and therefore two extra or two less public holidays in Good Friday and Easter Monday.

Employers are permitted to dictate to employees when they must take their holiday provided they give adequate notice. This must be at least twice the period of leave. So, if an employer wanted an employee to take a particular week as holiday, they would need to give them at least two weeks notice.

The period between Christmas and New Year is a good example of when many companies might insist that employees reserve some of their holiday allocation. If it happens every year, we would expect to see it stated in the company staff handbook. Some factories still operate shutdown periods two or three times a year, effectively dictating exactly when staff must take their holiday; although high absence rates at other times of the year can prove to be an issue under such conditions.

Employees should always confirm their holiday time with work before booking holidays, flights etc. as employers are not obliged to give employees specific dates if they have good reason not to; resources for a new contract are required for example. We would say though that employers should have clear and fair rules around holiday bookings amongst their teams. Taking terms to have preference when booking holiday will probably see as more diplomatic than a simple first-come first served basis. This is especially true if a high proportion of your workforce have school age children and are restricted or confined by term times.

Annual leave entitlement can be enhanced but not reduced below the statutory amount. We usually see extra leave granted as a reward for long service so an extra day or day might be given after working for a company for five years.

Finally, it is the employer’s responsibility to ensure that all employees take their annual leave, dictating when it must be taken inf necessary. It is not permitted to carry statutory leave into the following year. This was permitted during Covid, predominantly designed to benefit NHS staff, but it has since been rescinded.

Specific holiday entitlement is a contractual term and so should be included in everyone’s contract of employment. We would normally expect to see the rules for requesting and taking holiday in the staff handbook. When an employee leaves, they should be paid for any holiday they have accrued but not taken, and the employer is within their rights to withhold from final pay, any time the employee has taken off but not accrued in that holiday year.

This covers the essential rules of annual leave but there will always be a nuanced question about specific individuals so we’re here to help on 01452 331331 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it.


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