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An Employers Guide to Statutory Leave and other Holiday Rules

As an employer, you’re required to give employees at least the minimum statutory holiday entitlement as set out in the Working Time Regulations 1998. You must also comply with any contractual entitlements and obligations agreed in the employee’s individual contract of employment.

The contract of employment

An employee’s annual leave entitlement forms part of their contract of employment; therefore, it should be documented in their written statement of employment particulars or in their contract. This must be given to the employee within two months of starting work.

Statutory holiday entitlement

Employees in the UK are entitled to 5.6 weeks’ (28 days) paid holiday a year and this can, at the employer’s discretion, include bank holidays. You always have the option to offer more leave than the legal minimum.


Full-time workers (working 5 days a week) are entitled to 28 days of paid annual leave. Statutory paid holiday entitlement is limited to 28 days, therefore, employees working 6 days a week are only entitled to 28 days’ paid holiday.


Part-time employees are entitled to a pro rata calculation of the same amount of holiday as full-time employees, but always rounded up to the nearest half day. Due to the variation of working times and the complexity of bank holidays it is usually easier to calculate part-time entitlements in hours as oppose to days.

Bank holidays

There’s no statutory entitlement to paid leave for bank (or public) holidays. You have discretion as to whether you offer your employees paid leave for bank holidays; but do ensure you comply with any contractual obligations in this respect. Paid bank holidays can be counted as part of the statutory 5.6 weeks’ holiday entitlement under the Working Time Regulations 1998.

The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 mean that part-time staff are legally entitled to pro rata holiday based on the normal full-time employee’s entitlement. Therefore, bank holidays must be accounted for in the annual leave calculation.

Holiday accrual

Normally holiday accrues on a daily basis, although some employers calculate holiday accrued as one twelfth of the leave entitlement in each month. Employees are entitled to accrue holiday entitlement during, for example, sickness absence and maternity, paternity and adoption leave.

The leave year

As an employer, you’ll usually set the dates of your ‘leave year’ to coincide with the calendar year, January to December, or your financial year, April to March.

The leave year that applies to each employee must be stated in their contract. Don’t forget that if you decide to change the holiday year it will probably mean a change to the employees’ terms and conditions of employment, so you should follow a variation of contract process and obtain the employee’s agreement.

If an employee commences employment part way through the leave year, then their initial holiday entitlement is based on the period from their start date until the leave year ends.

If an employee leaves employment part way through the leave year, then their holiday entitlement will be adjusted accordingly – also taking account of any leave already taken.

Requesting annual leave

You should ensure the rules for requesting annual leave are set out in your staff handbook or in a specific policy. As a general rule, the notice period for taking leave is at least twice as long as the amount of leave an employee wants to take, unless the contract says something different. You can refuse a leave request, but you must give as much notice as the amount of leave requested. Although you can refuse to give leave at a certain time, you can’t refuse to let employees take the leave at all.

You are able to determine the holiday and annual leave rules; for example, you can:

  • Determine when leave is taken;
  • Require staff to take leave at certain times, e.g. bank holidays or Christmas;
  • Restrict when leave can be taken, e.g. at certain busy periods;
  • Stipulate that untaken leave (where carry-over is not allowed) will be lost; and
  • Confirm that taking time off which has not been approved will be considered unauthorised leave and adjustments to salary will be made accordingly.


The first 4 weeks of statutory holiday entitlement must be taken within the holiday year (except in cases of sickness absence). Any holiday over the first 4 weeks, with agreement, can be carried over into the following leave year. It’s for the employer to decide their policy on carry-over and detail this in the employment contract. The statutory position is that if an employee gets 28 days’ leave, they can carry over up to a maximum of 8 days if your policy allows for carry-over.

Holiday and sickness absence

Statutory holiday entitlement is accrued while an employee is off work sic, regardless of how long they’re off. Statutory holiday entitlement which isn’t used because of illness can be carried over into the next leave year. You must allow an employee to carry over a maximum of 20 of their 28 days’ leave entitlement if the worker couldn’t take annual leave because they were off sick. If an employee is ill just before or during their holiday, they can take it as sick leave instead. An employee can ask to take their paid holiday for the time they’re off work sick; for example, they might do this if they don’t qualify for sick pay.

Holiday pay

Ordinarily, employees will receive their normal hourly or weekly pay while on leave. However, where hours or weekly working patterns vary, holiday pay should represent an average hourly rate. To calculate the average hourly rate, only the hours worked and how much was paid for them should be counted. Take the average rate over the last 12 weeks. If no pay was paid in any week, count back a further week so that the rate is based on 12 weeks in which pay was paid. Holiday pay calculations must also include regular overtime pay. This only applies to the first 4 weeks of holiday taken by an employee each year. However, many employers choose to apply this rule to all holiday for ease of administration.

Bonus and commission payments must also be considered; however, as these payments are variable and may be paid at various times of the year, advice should be sought on how and when to include them in holiday pay calculations.

If you need any help and advice in relation to statutory leave, please do not hesitate to contact me or the employment team on 0113 350 4030 or at hello@scesolicitors.co.uk.

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SCE Solicitors is a boutique employment law practice based in Leeds which advises clients nationwide.  Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Emma Roberts
Latest posts by Emma Roberts (see all)
Emma Roberts

Emma is a trainee solicitor at SCE Solicitors. Emma commenced her training contract in September 2018 and is currently working in the employment law department assisting director Samira Cakali. Emma also assists in the running of the firm’s myHR service where she can support you in the day-to-day management of your staff.

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