Employment Matters July 2008

As it’s the height of the summer holiday period those of us who are not fortunate enough to be sunning ourselves on a beach somewhere might turn our thoughts to holidays in a more practical and legal sense. Not as enjoyable, but perhaps these thoughts will lead to us planning our next breaks!

Employers are required to set out details of entitlement to annual holidays in the written statement or contract of employment, which is given to employees in their first eight weeks of employment. This should be set out in such a way that employees can easily understand how much paid and unpaid leave they are entitled to and whether there are any restrictions as to when this leave can be taken. Entitlement to holiday applies to all workers – a broader definition than "employee" and you should consider the holiday entitlement of all workers in your organisation, regardless of whether or not they are your employees.

Current Entitlement
Originally the Working Time Regulations gave workers the right to four weeks’ annual leave and most (but not all) employers observed and paid bank and public holidays as "extras". This was changed in October 2007 so that the estimated six million workers whose employers included the public holidays in the four weeks’ entitlement would get the same amount of time off as the rest of us. These changes have been introduced in stages so that the current basic entitlement is 4.8 weeks’ paid annual leave. This equates to 24 days’ leave if the employee is full time and works a five day week. The entitlement is pro rata for part time employees: for example an employee who works 2.5 days a week is entitled to 12 full days’ paid leave a year.

From April 2009
From 1 April 2009 workers will be entitled to a statutory minimum of 5.6 weeks’ paid annual leave. This will mean 28 days’ paid leave for a full time employee working a five day week and again a calculation should be made on a pro rata basis for part time employees. This statutory entitlement will be subject to a maximum limit of 28 days even if a worker works more than five days a week. The employer will only be required to provide 28 days’ paid annual leave, although of course employers will be free to allow additional days’ leave if they wish. Rather than "give" workers an extra day off for public holidays most employers will now require that workers take a day off, from their entitlement.

The contract of employment
The changes should be consistent with the provisions which have been in place for the majority of employees for many years, and the government’s advice has been that as long as you have been giving workers extra time off for public holidays you need to take no action. You may find, however, that your staff’s contracts of employment need to be updated. For example if you have wording telling staff that they will be given time off for public holidays in addition to their annual leave entitlement you may want to change this! From 1 April 2009 workers can be expected to take time off for all eight public holidays out of their entitlement.

Part Time Workers
Part time workers should always be treated in the same manner as full timers and shouldn’t lose out just because they work part time. In terms of paid annual leave this means they are entitled to the same paid annual leave as a full time worker but on a pro rata basis. This also means that if an employer gives full time workers more paid leave than the statutory minimum it must also ensure that part time employees have the same benefit.

For example from 1 April 2009, a part time employee working 2.5 days a week will be entitled to a statutory minimum of 14 full days’ paid leave compared to a full time employee’s 28 days. If an employer actually provides its full time employees with 34 days’ paid leave (ie six days in excess of the statutory minimum) then it should also provide this benefit to its part time employees and give those working 2.5 days a week 17 days’ paid leave (14 days for the statutory minimum and three days for the enhanced entitlement).
In order to assist employers to calculate the pro rata amount of leave part time workers are due the Government provides a useful online calculator.

If an employer requires staff to take a day off for public holidays, part-timers who do not work on that day (most frequently Mondays) will end up with an entitlement to a days’ holiday (pro rata) which they may take at some other time. This reverses the position which resulted from the case of McMenemy v Capita Business Services Limited, in which Mr McMenemy was excluded from enjoying a number of bank holidays since he worked from Wednesday to Friday.

Part days
Where the calculation results in an entitlement to a "part day" (for instance a worker working three days a week is currently entitled to 14.4 days’ leave) you may round up, giving 15 days’ leave but you may not round down. You may, however, find a way of giving the employee 0.4 of a day off!

Variations in pay and hours
Workers may work regular hours but still earn different weekly or monthly amounts. If the reason for this is commission or bonuses, which are paid irrespective of the hours worked, the worker’s average hourly rate for the last 12 weeks should be calculated (excluding any premium for overtime) and multiplied by the normal weekly hours to give a week’s pay.

If the reason for the variation is that the worker works a set number of hours but at different times which attract different rates (such as shifts) again a week’s pay is calculated by reference to the preceding 12 weeks, but this time any allowance for particular shifts is included.

If a worker works irregular hours a calculation must be based on average weekly earnings over the preceding 12 weeks. This gives an average number of hours as well as or instead of an average hourly rate.

Some workers work for less than the whole year – for example term-time only workers. Their entitlement to holiday is expressed in hours per year rather than weeks. Their working hours per year are calculated and then apportioned over a 48 week year (four weeks’ holiday are excluded ) to give a figure for their average weekly hours. They are then entitled to 4.8 weeks’ (until 1 April 2009) holiday at that rate – so if there are 40 weeks in the school year and a worker works 40 hours in each of those weeks, the average weekly hours over the year is 33.3. The entitlement to holiday is therefore 33.3 x 4.8, giving them 160 hours holiday per year.