What is holiday entitlement?

Holiday entitlement is the legal minimum amount of time employees can have off each year. Under UK law, paid holiday entitlement is currently 5.6 weeks per year.

Holiday entitlement UK

In the UK, you’re entitled to a minimum of 5.6 weeks of paid holiday per year. This equates to 28 days of paid annual leave per annum for a full-time employee working five days a week.

Part-time employees are entitled to the same amount of holiday. This is calculated pro rata, which means it is proportional to the amount of days they work. So if your employees work 3 days a week, they’re entitled to 16.8 days paid holiday per year.

You cannot round holiday entitlement down, but you can round it up – so give your employees 17 days instead of 16.8, for example.

As an employer, you also can give more than the minimum number of weeks if you want to. It is good practice to specify how much leave employees are entitled to in employee contracts, or in your company handbook if you have one.

Employers can ultimately decide when employees take their holiday, and approve their requests. You can also decide whether to include bank holidays and public holidays as part of the minimum entitlement. You don’t legally have to give employees paid leave on bank holidays or public holidays.

Employees can start accruing (building up) holidays as soon as they start work. Employees are also entitled to holiday leave through their ordinary and additional maternity, paternity and adoption leave.

List of 2018 UK Bank Holidays, which can be included in holiday entitlementHoliday entitlement for self-employed

Unfortunately, you have no statutory right to paid annual leave if you’re self-employed. You are, however, entitled to paid holidays if you are classed as a worker.

Generally speaking, you’re considered a worker if you have a contract and have to turn up for work even when you don’t want to. You can learn more about your employment status and entitlements here.

Holiday pay entitlement

Employees are entitled to full pay during their holidays. If your employees leave without taking all of their holidays, you also have to pay your employees for any holidays they don’t take.

Calculating holiday pay

Employee holiday pay should consist of normal weekly wages plus any guaranteed overtime. Non-guaranteed overtime, commission and work-related travel also need to be taken into account.

If your employees have varied pay, then their holiday pay should be their average weekly wage from the previous 12 weeks. Similarly, if your employees work shifts then you should average their weekly hours over the prior 12 weeks and use this to calculate their average weekly hours.

Calculate holiday entitlement

If your employees work a full-time, five day week then they will be entitled to the full minimum of 28 days paid leave per year. For employees who work less than this, you can calculate their annual leave by multiplying the number of days they work by 5.6.

This calculation also applies to part-time employees and agency workers. The agency must allow employees to take their paid holiday.

Part-time and agency workers shouldn’t be treated less favourably than full-time employees. When you are handling holiday requests or rotas, treat your employees fairly and take their requests into account. Also remember that if you give full-time employees extra days off, then you may have to give this time to part-time employees too.

HR software is a great way to keep track of your employee’s holidays. You can quickly create full reports on employee absences and use them to:

  • Avoid potential staff shortages by seeing when all team members are booked off work
  • Block out business-critical days to ensure all staff are in
  • Easily track individuals to ensure they aren’t taking too much or too little leave

Calculate holiday entitlement for shift workers

The holiday entitlement for shift workers, as mentioned above, is worked out using an average of their shifts over the preceding 12 weeks. Simply multiply their number of shifts by 5.6 (the number of weeks they’re entitled to) to find how much time they can take.

So for example: your employee works 4x 12-hour shifts ten has 4 days off. This means their average working week consists of 3.5x 12-hour shifts. Multiplying this by their holiday entitlement (5.6 weeks x 3.5 shifts) tells you that they’re entitled to 19.6x 12 hour shifts – so 19.6 equivalent days paid annual leave.

Annual leave entitlement for casual or irregular work

If you employ casual labourers or use zero hour contracts, then it’s easiest to calculate how much holiday entitlement is accrued (built up) in relation to the hours they work.

5.6 weeks paid leave is equivalent to 72.6 minutes paid holiday for every 10 hours worked. This is calculated as follows:

  • Subtract 5.6 weeks from the 52 weeks of the year (as your employee won’t be at work to accrue holidays during their annual leave). This gives you 46.4 weeks.
  • Divide the 5.6 weeks annual leave by the 46.4 working weeks in the year and multiply this by 100 to get 12.07%.
  • 12.07% multiplied by 10 hours worked gives 1.21 hours or 72.6 minutes holiday earned.

Managing employee holiday entitlement

There are two ways to manage holiday entitlement for your employees: a “leave year” or an “accrual system”.

In leave years, you tell your employees when you expect them to take their annual leave – for example 1 June to 31 May, or 1 January to 31 December.

If your employee starts part way through a holiday year (for example starting in May when the holiday year starts in January) then they’ll be entitled to a proportion of your leave. The same applies if they leave part way through the year.

In an accrual system, employees “earn” their holidays before they take them. This means they essentially get 1/12th of their holiday entitlement for every month they work. Accrual continues during statutory absences like maternity leave.

Annual leave entitlement when an employee leaves

When your employees leave, they must receive full pay for any holiday entitlement they are entitled to but have not yet taken. This applies even your employee has been dismissed for gross misconduct.

You can calculate the pay they’re due by:

  1. Multiplying the total holiday entitlement for the year (5.6 weeks) by the fraction of the year at the date of leaving.
  2. Taking this figure and subtracting the amount of holiday already taken to find the amount of annual leave they’re still entitled to.

If an employee leaves having taken more holidays than they have accrued, then they have to pay these holidays back. Note that even in a leave year, holidays are effectively accrued at a rate of 2 days holiday per month.

Carrying over annual leave

Employees may request to carry holidays over into the next leave year, but all of their statutory minimum holiday entitlement must be taken each year. Similarly, employees aren’t allowed to exchange untaken holiday entitlement for pay.

You can, however, allow your employees to carry any additional holidays provided they take the legal minimum.

Giving and taking notice on staff holidays

Your employees must give you notice before they want to take holiday. Normally, this should be twice the length of the holidays they want to take (so a fortnight’s notice for a week’s holiday).

If you refuse their request, you must give them notice at least as long as the holiday requested (so a week’s notice for a week’s holiday).

As an employer, you can decide when some or all of your employees holidays are taken. This could be over bank holidays, or at Christmas or other holidays. You have to give the same amount of notice as employees.

You can set out the rules for taking holidays in employee contracts, but you cannot prevent your employees from taking their due holidays.

Managing holiday entitlement in a small business

As an employer, it is your responsibility to keep track of when holidays are being taken, that they don’t create staff shortages by being off at the same time, and that you have enough staff during business critical time.

It can become a logistical headache and, as you can see, there’s quite a lot to calculate when it comes to individual employee holiday entitlement. The more employees you have, the more difficult it can become to track and ensure your employees are getting their due time off work.

Managing holiday entitlement in a small business can be difficult, but it is essential. That’s why we created KashFlow HR. Our HR software streamlines and simplifies the holiday entitlement process by:

  • Allowing employees to manage their personal admin and holiday requests
  • Streamlining the approval process – you can do it from an email
  • Letting you track headcount across multiple sites, from one screen
  • Track the Bradford Factor of each employee to ensure absences don’t negatively affect company productivity.

HR software is a fantastic way to manage holiday entitlement. To see how it can improve management in your small business, arrange a personal demo or try it yourself with a HR software free trial.

See how KashFlow works with your business and your books