Holiday allowance and holiday pay
Ensuring you have the full holiday allowance and pay that you are entitled to
- Calculating your full entitlement to holiday allowance and pay can be complicated. It is therefore important to ensure that you are, and have been, receiving your full allowance.
- If you don’t take your full holiday allowance within the relevant holiday year it can be lost.
- If you think you may not be receiving the correct holiday entitlement or holiday pay, we can advise how best to resolve this situation and, if necessary, negotiate with your employer on your behalf.
Does your employer allow you to take the statutory minimum amount of holiday each year and when you take holiday are you being paid correctly?
What is a holiday allowance?
A holiday allowance is a specified amount of paid time off that an employee is entitled to take as leave during the course of a year. This may include both statutory annual leave and any additional holiday entitlement provided by the employer. Holiday allowances can vary depending on the terms of the employment contract and may be subject to certain restrictions or conditions.
Employees and workers are entitled to a minimum amount of paid holiday a year. For part-time employees and workers, their entitlement is subject to a pro-rata amount of holiday based on the number of hours they work.
Those employees and workers who don’t work regular hours (e.g. because they work shifts) have a slightly more complex formula to use when calculating their holiday entitlement. For example, shift workers may have their holiday allowance calculated using an average of the hours worked over a certain period.
Employers are able to give an employee or worker more days of holiday entitlement by stating a higher allowance in the employment contract. However, they are unable to decrease the holiday entitlement below the minimum amount set out in law.
The law states that you must take a certain amount of holiday per year (which may or may not be based on the calendar year, depending on your employer) or you will lose the right to take that holiday, unless you were unable to take it because you were sick, injured, pregnant or on maternity leave.
In circumstances such as these, you can carry your annual leave forward into the next holiday year. However, your employment contract or staff handbook may set out additional rules relating to ‘carry over’ of holiday; for example, limiting the number of days you can carry over with you (unless an exception applies) and confirming when you must take that leave by.
If you are worried that you are not being allowed to take the minimum amount of time off as holiday, please get in touch and we can assist you by liaising with your employer to rectify the situation.
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What is holiday pay?
By law, holiday pay should be paid to the employee for the time when annual leave is taken. Employers should no longer be including an amount for holiday pay in the hourly rate (often known as ‘rolled-up holiday pay’) as this has been ruled as incompatible with the law. If your existing contract still includes rolled-up pay, you should contact us and we can give you expert advice so that you can liaise with your employer and re-negotiate your terms of employment with them.
Under current legislation, employees and workers are legally entitled to a week’s pay for each week of annual leave that they take. A week’s pay is worked out according to the number of hours you usually work and how you are usually paid for these hours or work. Employees are entitled to be paid their “normal remuneration” for at least 4 weeks (or 20 days) of their allocation of annual leave. If, as an employee or worker, you receive bonus payments, commission payments, regularly work overtime or receive any other type of payments from your employer which are linked to your work duties, these will also need to be considered when calculating your holiday pay.
How Moore Barlow can help
If you are worried that you are being paid incorrectly for your annual leave and therefore losing out on pay when you take holiday, please contact one of our team who can assess your pay and holiday pay, and advise your rights and on the next steps you should take.
With our expert staff based across our offices in London, Richmond, Southampton, Guildford, Lymington, and Woking we offer specialist employment law advice to clients nationwide.
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