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Legal Obligations to Provide Paid Annual Holiday Entitlement

When you run a business, you are legally obliged to give your employees a certain amount of paid leave each year. This is known as their annual leave entitlement.

Annual leave entitlement for employees

Most workers who work for five days a week will be entitled to 28 days of leave a year.

If a worker works for fewer than five days per week, their annual leave entitlement can be calculated by multiplying the number of days a week they work by 5.6.

The annual leave entitlement for a worker doing shift work or otherwise working irregular hours can be calculated using our Holiday Entitlement Calculator.

Upper limit

Note, however, that the upper limit for the statutory amount of annual leave entitlement is 28 days, so somebody working six days a week would not be entitled to any more leave than somebody working five.

As an employer, however, you are free to offer your employees extra days leave on top of the minimum entitlement. Employers are free to set their own rules regarding entitlement to these extra days. For example, you could grant your employees an extra day’s leave after a certain number of years of service.

Full-time/part-time employees/agency workers

To calculate the leave entitlement of a worker who works fewer than five days a week, multiply the number of days a week they work by 5.6. For example, the annual leave entitlement of somebody who works for three days a week would be 3 x 5.6 = 18.6 days.

Managing part days

When calculating an employee’s leave entitlement you may find that you are not left with a round number. For example, somebody working part-time for four days a week has an annual leave entitlement of 22.4 days. As an employer you have a number of options for handling these part days:

  • Allow the employee to arrive late or leave early for one day
  • Round up their holiday entitlement to the nearest whole day
  • Pay the employee for the part day
  • Allow the employee to carry over the part day to the next leave year.

Bank holidays

As an employer you are not obliged to give your employees bank holidays as paid leave. It is up to you whether or not you include bank holidays as part of an employee’s annual leave entitlement.

In what circumstances can I refuse leave requests

As an employer you are entitled to turn down an employee’s request for annual leave at a certain time, but you must give as much notice as the amount of time off requested.

You may wish to dictate to your employees that they take time off during a company shutdown, or stop them from taking leave at busy times.

You must not refuse to let your employees take leave at all.

Leave years

Employees have a leave year in which they should use their annual leave entitlement. You should set this out in their contract, but if it is not detailed there it starts on:

  • The day on which the employee started their job (if this was after 1 October 1998)
  • 1 October (if they started on or before 1 October 1998)

New starters

If a new employee starts midway through the leave year then they are only entitled to a portion of their annual leave. This will depend on how much of the leave year is left.

Alternatively employers can make use of an accrual system in the first year, by which an employee accrues a twelfth of their annual leave each month.

Carrying over leave

If an employee has an annual leave entitlement of 28 days then they can carry over a maximum of 8 days’ unused leave to the next year. If they get more than 28 days then you can allow them to carry over more than eight days.

Pay for annual leave

Within their annual entitlement, employees are entitled to a week’s pay for each week of leave that they take. What is considered a week’s pay for this purpose for different classes of worker is calculated according to the table below:

Working pattern A week’s pay is...
Fixed hours and fixed pay (part- or full-time) How much an employee gets for a week’s work under their contract
Shift work with fixed hours (part- or full-time) The average number of weekly fixed hours worked in the previous 12 weeks multiplied by their average hourly rate
No fixed hours The average pay that the employee received across the previous 12 weeks in which they were paid

If an employee is sick on holiday

If an employee is away from work on sick leave then their annual leave entitlement still builds up as normal.

If an employee falls ill just before or during a period of leave, they can choose to take the time off as sick leave instead.

Annual leave during an employee’s notice period

If an employee has unused statutory leave when their employment finishes, they are entitled to be paid for this.

An employee who has handed in their notice may be able to take annual leave during their notice period, depending on how much they have already taken and how much of the year has passed.

If the employee has already taken more leave in that year than their entitlement at that point in the year indicates, then the employer should not deduct from the employee’s final pay unless it has been agreed beforehand in writing.