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Holiday pay and holiday entitlements

Holiday pay and holiday entitlements are one of the key employee rights and the right to holiday. Most of the rules governing holiday entitlement and pay are set out in the Working Time Regulations 1998. Some of the rules can be complex! Our employment advisers are experts in advising businesses and employees on their employment law rights, so do give us a call if you have any questions.

Holiday: the basic rights

  • Employees and workers have a right to 5.6 weeks’ paid annual leave as a minimum requirement. This is known as statutory holiday entitlement.
  • Some employers however will allow employees more holiday entitlement than the statutory minimum and this is known as contractual holiday entitlement.
  • Workers who work part-time are entitled to the same holiday entitlement calculated on a ‘pro rata’ basis.
  • Employers or workers who leave part way through a holiday year are entitled to be paid for any accrued but untaken holiday pay. Conversely any employee who takes more than their accrued entitlement may have to refund the employer!

Statutory holiday pay

A worker is entitled to be paid during statutory annual leave at a rate of a week’s pay for each week of leave. Rules on how a “week’s pay” is calculated is set out in the Employment Rights Act 1996:

  • If an employee has “normal working hours” whose pay does not vary with the amount of work done, they are entitled to their normal pay for that period (normally basic pay without any bonuses or commissions but there are complex issues arising out of this); or
  • If workers have normal working hours but their pay varies according to the amount of work done (e.g. piece work) or varies according to the time of work then the pay they are entitled to is based on their average pay during those normal working hours over the previous 12 weeks (again there are complex rules on the detail of what is included here).
  • If workers have no normal working hours a week’s pay is an average of all sums earned in the previous 12 weeks including overtime payments and commission.

Further information

ACAS have produced some good guidance on holidays and holiday pay.

The government website also has plenty of information.


For business law advice call 0845 225 2635


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