Before 1998, employees in the UK had no statutory right to holiday leave from work, paid or unpaid. Their rights to holiday were entirely dependent on the terms of their contract of employment. However, when the Working Time Regulations (WTR) came into force in October 1998, all that changed. Irrespective of what it said in their employment contract, all employees became entitled to minimum periods of paid annual leave irrespective of their length of service. The rest of this note examines the statutory right to leave. Anything in excess of this will be governed by the terms of the contract.

How much holiday?

Under the provisions of the WTR, workers (a defined term which includes employees and also others who work under a service contract but excludes the self-employed) are currently entitled to 5.6 weeks’ of paid holiday each year. (An employer’s holiday year may be a calendar year or a different 12-month period as determined by the employer). This is made up of the right to a minimum of four weeks’ annual leave under the EC Working Time Directive and an additional 1.6 weeks under UK law. This additional amount was intended to represent the number of public holidays recognised in the UK but does not have to be used for them.

The right to 5.6 weeks’ holiday is equivalent to 28 working days for someone who works full time. Other points to note about this entitlement are:

  • The entitlement is pro-rated for someone who works part-time
  • The entitlement is pro-rated for a worker who begins employment part way through the holiday year

How much pay?

Under the WTR, a worker is entitled to be paid during his statutory annual leave at a rate of a week’s pay for each week of leave. The calculation of a week’s pay is in accordance with the rather complicated rules set out in the WTR. In summary, workers with normal working hours whose pay does not vary with the amount of work done, are entitled to the amount which is usually payable during a working week. Where the amount of pay varies, the calculation is based on average weekly earnings over a 12–week reference period. In a recent case, the European Court of Justice has ruled that where a worker’s pay normally includes commission payments, this should also be included in the calculation of holiday pay. The UK courts are due to determine whether the WTR can be interpreted in accordance with the ruling.

No statutory entitlement to public holidays

There are 8 public holidays recognised in England and Wales. They are New Year’s Day, Good Friday, Easter Monday, the first Monday and last Monday in May, the last Monday in August, Christmas Day and Boxing Day.

Whilst the additional period of statutory holiday of 1.6 weeks was intended to cover the 8 public holidays, there is no statutory entitlement to time off, whether paid or unpaid, on these days. However, for those workers who work full-time, it is customary for their entitlement to 28 days’ paid holiday each year to be stated in their contract as inclusive of the 8 public holidays.

No payment in lieu of holiday except on termination

Under the WTR, statutory holiday may not be replaced by a payment in lieu except on termination of employment. On termination of employment, if a worker has accrued entitlement to holiday which he has not taken, a payment in lieu of this untaken holiday must be made.