Holiday Pay Update

15th July 2015 by

There continue to be developments in how holiday and holiday pay are dealt with and we will keep you updated as matters progress.

All workers have a right to paid holiday. The minimum entitlement is 5.6 weeks via the Working Time Regulations (WTR)

e.g.  28 days including public holidays for someone working 5 days per week (adjusted on a pro rata basis for part time workers). The essential requirement being that however many hours per week or days per week are worked, the worker is entitled to 5.6 “weeks” away from work per year.

There may also be an additional entitlement under the contract of employment.

Holiday pay should reflect the pay a worker normally gets when at work.

This “normal remuneration” should include for example, allowances paid as an intrinsic part of the job when at work (Williams v British Airways), regular commissions (Lock v British Gas) , guaranteed overtime and payment for non guaranteed overtime should also be included in holiday pay (Bear Scotland v Fulton).

More recently the Court of Appeal in N Ireland has said (in Patterson v Castlereagh Borough Council) that voluntary overtime may need to be included and it will be for each tribunal to determine whether or not overtime is “normally” carried out and whether overtime pay can properly be described as forming part of “normal remuneration” for holiday pay calculations. In practice the greater the frequency and regularity of any voluntary overtime, the more likely it is to be regarded as forming part of a workers “normal remuneration”.

Where workers are sick before a planned period of holiday to the extent they are not fit for work during the holiday then they should be allowed to re-schedule the planned holiday.

A similar approach should be taken where illness occurs during a period of holiday. However, employers may require stringent reporting and medical confirmation of any illness during holiday if the worker is seeking to claim a period of sick leave and/or to reschedule the period of holiday during which they were ill.

Where workers do not request holiday then they will not generally be entitled to payment for unasked for and untaken holiday, other than when employment ends and there is accrued untaken holiday, for which payment should be made.

Recently in Plumb v Duncan Print Group Ltd the Employment Appeal Tribunal ruled that annual leave untaken because of sickness could be carried over for 18 months.  A worker on sick leave can carry forward leave into a new holiday year under the WTR even if the worker was capable of taking annual leave. But this isn’t an unlimited right to carry over holiday into subsequent years indefinitely – the maximum period for which holiday could be carried over was 18 months from the end of the leave year in which the annual leave arose.

Finally, from 1 July 2015 any new holiday pay claims brought in the Employment Tribunal can only cover a period stretching back two years from the date on which the claim is made.

For more information on this topic on any the services we offer please contact the employment team on 020 7822 4000 or email