News and legal updates for small businesses in the UK.

How many holiday days are staff entitled to and what do I need to pay them?

The Law

Currently, UK legislation states that employees are entitled to a minimum of 5.6 weeks holiday/annual leave entitlement each year. This is inclusive of Bank Holidays or any days that the business usually closes.

 How do I calculate the minimum holiday entitlement?

If a person normally works for 5 days in any 7-day week then they will be entitled to 28 days’ holiday pay in any holiday year.  This rule applies if the employee works only four hours per day or the usual 8 hours per day, they will still be entitled to 28 days of holiday on their normal rate of pay.

If the employee works less than 5 days, the following calculation applies:

  • Divide 28 days by 5 (normal working days for a full time employee) = 5.6
  • Multiply 5.6 by the number of days the part time person works, e.g. an employee working 3 days per a week: 5.6 x 3 = 16.8 days. You cannot round down and we would recommend you round this figure up to 17 days.

How much holiday pay should be paid for each day’s holiday?

The simplest and fairest way to do this is to use the employees’ basic pay for a standard working week and divide this by the number of days they work in the week.  This solves the problem which arises if an employee works a different number of hours on different days.

When should the holiday year start?

This might sound a bit trivial but it’s actually quite easy to find yourself breaking the law if you don’t consider this carefully.  If your employment contracts allow each employee 20 days plus the usual bank holiday and then also states that the holiday year starts on the 1st April then you might not just be getting an early chocolate fix if Easter comes early, you mind find yourself in an employment tribunal.  This is because if Easter occurs in April the first year and March the following year then the number of bank holidays in the first year is 10, meaning you will be paying your staff for two extra days’ holiday, and then only 6 in the subsequent year which is less than the statutory minimum and could land you in trouble.  To avoid this, we’d always recommend that your employment contracts allow your staff 28 days (including bank holidays) and that your holiday year runs from the 1st January to 31st December. 

Tags: , , ,