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Partner and Head of Family Law, Rugby
My commute into work this morning took ages rather than the leisurely jam free drive I have had for the last 2 months. That can only mean one thing…everyone is back at their desks, children are back at school and normal service has been resumed. You would therefore think that the issue of holidays would be the last thing that is likely to cause you a headache in September, well think again, holiday issues occur throughout the year, but are particularly common in September. Over the next couple of weeks, I will look at the issue of holidays, the headaches that they can cause for employers, and how you can deal with them as smoothly as possible.
So first things first, what is holiday? Holidays are essentially time away from work when an employee would otherwise be expected to attend work - holiday must therefore amount to time off. Holiday cannot be taken if the period in question is covered by daily or weekly rest periods. The relationship between holiday and sick leave, maternity leave or other family friendly leave has been the subject of much litigation and is rather complex, but the general rule is that you can’t take holiday if you aren’t at work! Of course, in many cases, holiday still accrues during these periods of leave, which can often be problematic in itself.
A question I am often asked is how much holiday is an employee entitled to. The answer is often not as straight forward as you think. The law says that all employees are entitled to 5.6 weeks annual leave in each leave year (Europe gives us 4 weeks, and then the UK have topped this up with an additional 1.6 weeks). Of course, you can also increase the amount of holiday you give to your employees, known as contractual holiday. There is an important distinction between the 4 weeks holiday, the additional 1.6 weeks and any further contractual holiday your employees have, particularly when it comes to calculating holiday pay (more about that next time).
However, as you would expect, things are different for part-time employees. Part-time employees’ holiday is calculated on a pro-rata basis - they are still entitled to 5.6 weeks leave, but the number of days differs to that of a full time employee (which is 28 days), depending on how many days a week they work. For example, they work 2 days per week, they are therefore entitled to take 11.2 days per year holiday. It is vitally important to specify in a part-time contract what their holiday entitlement is. I have seen too many contracts that give them the full holiday entitlement - clearly a costly mistake and one that is rather hard to resolve. As if that isn’t enough, you then have bank holidays to think about and what happens if a bank holiday is one of their non-working days and you are closed?
So what is a leave year? A leave year is not always January to December, or April to March, it can be whatever an employer wishes it to be. You just need to make sure that whatever your holiday year is, it is clearly communicated to employees (usually in their contracts). If you do not specify holiday year, then the fall-back position is October to September. If every employee had a different holiday year – that would be an administrative nightmare or a genius solution to ensure that everyone is not trying to use up their holiday in the last month of the leave year! What you want to ensure is that your leave year does not end part-way through your busiest period.
Remember, if an employee starts or ends employment part way through your holiday year, their leave is pro-rata’d to reflect the remainder or the amount worked of the leave year. Many employers forget to do this and are then faced with an employee taking a lot of holiday during their first year or instead having to make a rather large payment in respect of untaken holiday upon termination of employment.
The key to ensuring holidays cause you as little headache as possible is to ensure that from the outset you are clear what holiday your employees are entitled to and that this is accurately recorded and communicated to them in their contracts of employment and holiday documentation. This will give you a solid foundation for what comes next….
If you have a holiday headache you would like to discuss, please contact us today.
To listen to our next webinar on holiday – register here.