Just two years after statutory holiday entitlement was set at four weeks, it is about to rise again. But what do the 1 April changes mean for employers?
Q How much holiday will workers be entitled to from 1 April 2009 and does this include bank and public holidays?
A A worker’s right to take holiday is governed by statute, the Working Time Regulations 1998 (WTR) and also by the relevant contract of employment or engagement. Since October 2007, a worker has had a statutory right to take a minimum of 4.8 weeks’ paid annual leave (24 days). On 1 April 2009 this entitlement is due to increase to a minimum of 5.6 weeks for a full-time worker (28 days). Bank and public holidays may be included in the 28 days.
Q If a leave year starts before the new entitlement comes in – say on 1 January 2009 – how should holiday entitlement be calculated?
A Statutory holiday entitlement for a worker whose leave year does not run from 31 March to 1 April will be calculated on a pro rata basis. For example, for a leave year running 1 January to 31 December, workers will get 9 months’ worth of the extra entitlement, ie, an extra 0.6 weeks (three days). The government has published an online calculator to make it simpler to calculate workers’ holiday entitlement in the years in which the change takes effect. The online calculator is available at businesslink.gov.uk. Note that the increase in statutory holiday entitlement may not now – after 1 April 2009 – be replaced by a payment in lieu.
Q Will employers have to ensure workers take their statutory entitlement?
A There is no legal obligation on an employer to insist that workers take their statutory holiday entitlement. The obligation is to allow a worker to take holiday if he or she wishes to. There are, however, motivational and health and safety reasons for an employer to encourage annual holiday to be taken.
Q Where does an employer stand if they offer staff pay in lieu of some statutory holiday?
A Annual leave may not be substituted by a payment in lieu, except where the worker’s employment or engagement is terminated. Note, however, that up until 1 April 2009 additional leave entitlement in excess of four weeks may have been replaced by a payment in lieu but, going forward, this exception will not apply.
Q How should statutory leave entitlement be calculated for part-timers?
A From 1 April 2009, a part-time worker will be entitled to 28 days holiday pro rated to reflect the number of days worked. If a worker, for example, does a three-day week, they will be entitled to at least 16.8 days annual leave as of 1 April 2009 (28 divided by five multiplied by three).
Q Will workers be entitled to carry over unused statutory holiday entitlement?
A The WTR does not provide for unused holiday to be carried forward into the next holiday year. Employers may, however, choose to allow workers to carry forward unused holiday as a matter of contract. The employer, however, cannot compel a worker to carry over holiday.
Q What is the state of the law in relation to holiday rights for workers on long-term sick leave?
A The long-standing issues in relation to this area of the law has, to an extent, been resolved by the recent ECJ decision in Stringer v HMRC.
The ECJ held that:
A worker on sick leave accrues annual leave despite not working.
It is for member states to decide whether a worker can take their annual leave during a period of sick leave.
At the end of a leave year, a worker on sick leave who has been prevented from taking annual leave must be allowed to carry it (all) over and take it at a later date (or if employment ends, be paid in lieu of it).
The right to be paid in lieu of accrued holiday on termination applies even if the worker has been on sick leave for the whole or part of the leave year.
The issue is now with the House of Lords. We hope the lords will particularly consider the practical and financial considerations of the final two points for employers. In light of this, employers should now examine their contractual holiday and sick leave policies, consider how they will be affected by the decision, and plan for how holiday entitlement, in the event of long-term sickness, will be addressed.
Katie Clarke, partner, McDermott Will & Emery