Is your employee entitled to paid holiday?

The summer holidays are in full swing and you may be wondering whether you should pay your staff while they are away on holiday.

All employees and workers are entitled to paid holiday which begins to accrue as soon as they start their job.  This includes casual workers who may work one day a week or sporadically as needed.  Even those on zero hours contracts are entitled to be paid for holiday they have accrued.

So in most cases the answer is Yes, you do have to pay your staff while they are on holiday, unless of course they have already used up their entitlement!

The only people who are not entitled to paid holiday are workers who are not on your payroll i.e. those who are self-employed.  Self-employed persons invoice you for the time they work or for the fee they agreed with you for a job.  A self-employed person should not charge you separately for their time off on holiday.  

You are legally obliged to pay your full-time employees for a minimum of 20 days plus 8 bank holidays (28 days in total or 5.6 weeks).  Employers can choose whether a bank holiday is part of the statutory 28 days holiday entitlement.

Part-time employees are entitled to paid holiday based on the number of days per week they work.  For example if they work 3 days per week they will be entitled to 3/5ths of the holiday entitlement i.e. 16.8 days.  

Irregular workers who are paid by the hour will have their paid leave calculated on the number of hours they have worked during the leave year or will receive one week’s paid holiday based on the average weekly pay they received during the previous 12 weeks.  Hourly paid irregular workers must not have their holiday pay included in their hourly pay rate but it can be paid to them as long as it is shown separately.  The hourly rate must be at least the National Minimum or National Living Wage before holiday pay. 

Most employers will have a leave year which runs from January to December or from April to March.  New employees will have their paid leave entitlement calculated from their start date until the end of the leave year.  Company policy will determine whether an employee can take their holiday entitlement in advance or whether they need to have worked for enough time to have accrued the amount of holiday they want to take.  

Some employers will run the holiday year for each individual employee from their start date but this can be more difficult to manage as the business grows and there are more employees.

If an employee leaves within 3 months of their start date they are still entitled to paid holiday based on the number of weeks they have worked.  An employer therefore has to pay them for the additional days they are due or allow them to leave earlier than the planned leaving date in order to use up their holiday entitlement.  If the employee has already used up more than their holiday entitlement when they leave the extra days can be deducted from their final pay.

Employees are still entitled to paid holiday if they are off sick or on maternity or paternity leave.

Employers can provide more than the minimum 28 days holiday per year if they want to.

We frequently calculate holiday pay entitlement as part of our payroll service for employers with new starters, leavers and those who work sporadically.  If you are considering outsourcing your payroll and giving up all those tasks that go with it please give us a call.  Not only will we be able to relieve you of the responsibility of calculating holiday pay we will be able to provide advice and support for any other payroll issues you come across.  You will find us friendly and helpful too!