Calculators to the ready

Under Regulation 13, Working Time Regulations 1998, every worker - whether part-time or full-time - has the right to four weeks’ paid holiday per year, or proportionally for part of a year. This is about to change. From 1 October 2007 this will increase to 4.8 weeks and from 1 October 2008 to 5.6 weeks.

The current position

  1. Every worker is entitled to four weeks’ annual leave. A week’s leave should allow workers to be away from work for a week. It should be the same amount of time as the working week: if a worker does a five-day week, he or she is entitled to 20 days’ leave; if he or she does a three-day week, the entitlement is 12 days’ leave.
  2. The leave entitlement under the WTR is not additional to bank holidays. There is no statutory right to take bank holidays as holiday.
  3. The WTR do not require a worker to have served a particular period of working time in order to qualify for paid annual leave although there are special provisions for accrual in the first year of service.
  4. Workers must give appropriate notice that they intend to take holiday leave to employers under the terms of the WTR. This can be set out in the contract. The default position is that twice as much notice as the period of holiday leave requested must be given.
  5. Employers can refuse permission for holiday leave provided they give notice which is at least as long as the holiday requested, so long as this does not effectively prevent the worker from taking holiday at all.
  6. Employers can set the times that workers take their leave, for example for an annual shutdown (except in maternity situations).
  7. Workers are only entitled to be paid for leave taken. No monies can be paid to a worker in respect of untaken holiday other than on the termination of a contract. Accordingly, if a worker has not taken his full holiday entitlement during a leave year, no payment can be made.
  8. On termination of employment only, the employee has the right to be paid for accrued but not taken holiday.
  9. Contractual holiday pay goes towards discharging the statutory entitlement under WTR.

The new proposals

1 The statutory entitlement to paid holiday will increase to:

  1. 4.8 weeks on 1 October 2007 (equivalent to 24 days for a worker working five days a week); and
  2. 5.6 weeks on 1 October 2008 (equivalent to 28 days for a worker working 5 days a week).

2 The increased entitlement is subject to a statutory maximum of 28 days. This means that a worker who works a six day week will not ultimately rise to 32 days due to cap.

[see table]

3 Employers cannot buy out the extra days.

4 There will not be a right to carry forward into a subsequent holiday year the extra days, however, the extra days can be carried forward by agreement between the worker and employer.

5 Other aspects of holiday entitlement under the WTR remain unchanged, such as:

  • Employers can still require holiday to be taken at specific times
  • Employers can refuse holiday at specific times.
  • Notice requirements remain the same.

Transitional calculations

Where a worker’s holiday year begins before 1 October, the additional holiday entitlement will be calculated by multiplying the proportion of their holiday year that is left to run by the additional holiday entitlement that applies from 1 October.

[see table]

Do the extra days need to be taken on bank holidays?

The increased holiday entitlement is clearly intended by the government to represent the bank holidays - 5.6 weeks being the equivalent to 20 days plus the eight existing bank holidays. However, the term bank holiday does not appear in the draft regulations.

It will remain the position that workers do not have the automatic right to take holiday actually on a bank holiday. Rather the number of paid annual leave days is generally increased. Employers will be able to require workers to take holiday leave on bank holidays provided they have given the requisite notice. An employer is already entitled to nominate particular dates as days of closure, when workers are expected to take annual leave, such as factory shutdowns or bank holidays. In the absence of agreement the employer must give notice of such specified dates of at least twice the length of the period of leave the worker is being ordered to take.

[see table]

Potential problem?

A potential problem, that will hopefully be addressed before the new regulations come into force, is what happens in relation to workers who already have a contractual right to “statutory holiday entitlement plus bank holidays”. With such a generally worded contractual clause, the worker will contractually still be entitled on 1 Oct 2008 to “statutory holidays” (now being 28 rather than 20) plus the 8 bank holidays (making a total of 36 days). The current wording of the draft regulations does not give the employer the right to vary unilaterally a contractual right to bank holidays in addition to statutory holiday entitlement simply because the statutory holiday entitlement is increased. Whether this is a problem for an employer will depend on the wording of the contractual holiday clause. A contractual clause currently stating entitlement to 20 days plus eight bank holidays will not present a problem, but a contractual clause simply providing "statutory entitlement plus bank holidays" will do, as the wording of the draft regulations currently stands.