How do I work out annual leave?

Hi. Today’s top tip is all about annual leave. Now, it’s the seven of hearts and we are working through our 52 top tips for employers. 

The law specifies a minimum of 5.6 weeks per year. This includes public and bank holidays. As a business, you need to decide whether you’ll provide more holiday, what your rules are around notice required when requesting holiday, the number of people allowed to take holiday at the same time, any periods when you won’t allow holiday to be taken, and whether or not you’ll allow holiday to be carried forward, and if so, how much and for how long. 

Now, there’s all sorts of rules about annual leave, but the first thing I’m going to say to you is that annual leave is really, really important. It’s important that your staff get time away from the office, that they unwind, that they recharge their batteries. Somebody who is at work every day is never going to be as productive as somebody who takes regular breaks. So, making sure that your staff receive all of their annual leave is really important. 

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Until 2019, most employers used a percentage method to calculate annual leave entitlement based on actual hours worked. The percentage applied was usually 12.07% as this is based on the statutory minimum 5.6 weeks of leave that a full-time employee is entitled to. Where employers gave full time employees more annual leave, they increased the percentage accordingly for flexible hour employees.

However, in 2019, a case was taken to the employment tribunal which challenged the basis of the calculation. 

• As there is no provision for the pro-ratering of annual leave entitlement in the legislation, all permanent workers are entitled to 5.6 weeks of annual leave per year including public and bank holidays.
• Therefore, regardless of how many weeks permanent employees work within the holiday year, they are now entitled to at least 5.6 weeks of annual leave and possibly more.
• Their holiday pay is calculated based on the average weekly pay received in the 52 weeks immediately prior to taking their time off.
• If they have had some weeks with no work and therefore no pay is received these are excluded and you go back to include the last 52 weeks in which they have done some work.
• The Supreme Court has said that it is not discriminatory to treat these employees differently to their part time full year colleagues – even when they may work the same number of hours across the year.

For more information see our blog How Do I Calculate Annual Leave For Zero Hours Employees? – DOHR.