Calculating paid holiday entitlement

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Employers are required by law to provide their workers with a minimum amount of paid holiday leave.

This is the case whether the employee is a full time member of staff, working part-time, an agency worker, or employed on a casual or zero hours contract.

This article sets out your obligations as an employer and your rights as an employee as to how much holiday a person is entitled to, and how much he or she should be paid for it.

How much paid holiday are you entitled to?

The basic rule is that if you work a standard 5 day week, whether Monday to Friday or over some or all of the weekend, then you are entitled to 28 days, or 5.6 weeks of holiday during the working year.

The right to be given 28 days of paid leave includes leave on bank holidays and public holidays. However, many employers give staff additional leave (most often paid, but sometimes unpaid) for these days.

There are 8 bank holiday days every year, so statutory annual leave is often described as being 4 weeks plus bank holidays, i.e. 4 x 5 working days + 8 public holidays.

If you work overtime, then you are still only entitled to 5.6 weeks of holiday.

An employer can decide to give additional paid leave beyond the legal minimum. Up to 38 days of leave in each year isn’t uncommon for senior level roles, although such employees may struggle to find time when it can be taken.

The basis for calculating annual leave

An employer can use one of two ways to calculate when an employee's holiday entitlement begins and ends.

Either the business can work around a “leave year basis” – usually either the accounting year or the calendar year – or it can calculate holiday based on an “accrual basis”.

Leave year basis

An employer must tell an employee when the leave year starts as soon as the employee starts working. This is usually done in the employment contract. If the contract of employment does not mention the leave year, then the leave year is specific to that employee and starts on the day the employee first started work.

Annual leave is given on a pro-rata basis to the amount of time during the leave year that the employee has worked. If a worker starts on 1 April and the leave year runs from 1 January, then the worker will be entitled to 75% of the 28 days, in total, 21 days of paid holiday.

Accrual basis

The accrual system apportions one twelfth of the worker’s annual leave for each month worked. Holiday only becomes available to be taken, once sufficient time has been worked.

However, employers who use the accrual basis are usually flexible and allow for bank holidays to be taken off even if the time at work has not been accrued. Employees are then expected to work without holiday in order to repay that time off.

How much holiday are different kinds of workers entitled to?

The legal obligation on employers to provide paid holiday applies to all workers, not just full time ones. It is a common myth that workers on zero hours contracts and agency workers aren’t entitled to paid holidays.

Part-time workers are entitled to paid holiday on a pro-rata basis to days or hours worked. So they will be given fewer days than full-time workers, but proportionally the same number. For example, an employee who works 4 days a week is entitled to 22 and a half days of paid holiday per year. Fractions of days are always rounded up to half days. Someone who works three days a week receives 17 days of annual holiday leave.

In addition, the law requires that all employees are treated no less favourably than any individual one. So if the employer gives an extra day off of paid leave (perhaps Christmas Eve), all employees are entitled to that, regardless of the number of days or hours they work.

A shift worker's holiday entitlement is calculated by averaging the length of their shifts over the last 12 week period.

Casual workers (such as those on zero hours contracts) are also entitled to payment in lieu of any untaken statutory paid holiday on termination of their employment. In other words, they have the same rights as full-time and part-time employees.

The calculation for a casual worker is to multiply the number of hours worked by 12.07%. So if a 25 hour week is worked, 181 minutes of holiday is accrued.

Calculating holiday pay

All workers should be paid the same rate while on annual holiday leave as while at work.

For example, a full time employee would receive holiday pay equal to one week’s salary for one week of paid annual leave.

Shift workers with fixed hours would be paid for the average number of weekly fixed hours he or she worked in the previous 12 weeks at his or her average hourly rate.

Casual workers’ pay while on holiday would be calculated by multiplying the number of hours taken as paid holiday by the hourly wage.

Requesting and granting leave

Employers need to be able to plan when work might be completed. So it is fair to require that workers give notice to take paid holiday.

Commonly the requirement is to make a request at least twice as long before as the amount of leave being sought. For example, if one week of holiday was being taken (5 working days), then two weeks’ notice would be needed to be given (10 working days).

The exact amount of time required between a request and taking leave depends on the employment contract. In other words, it is up to the employer, but set out in the contract or an employment policy.

An employer doesn’t have to grant a request for leave. When holiday can be taken is at the discretion of the employer and can be restricted. This must be fair though – employees cannot be discriminated against – nor can an employer claim that an employee is always needed at work – replacements should be available or there should be periods where time can be taken off.

Workers are entitled to make a complaint to an employment tribunal if an employer refuses reasonably to allow the employee to take paid leave. The right to time off is also regulated under other law relating to health and safety when working long hours.

Employers who refuse requests for time off, or who do not give the correct amount of paid leave could be fined heavily.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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