Holiday Pay

Ensure your payroll covers holiday entitlement

Ensure your payroll covers holiday entitlement

Employers are legally obliged to provide almost all of their employees with 5.6 weeks’ paid holiday (Statutory Annual Leave) every year, paid at the normal rate. The 5.6 weeks can include bank and public holidays.

Holiday pay is calculated according to the type of hours worked and how employees are paid, for example fixed hours, shift work, and casual hours. A holiday entitlement calculator is available on the gov.uk website.

An employer must calculate an employees annual leave entitlement, by using a ‘leave year’ or ‘accrual system’ to do so.

Key holiday entitlement facts:

  • An employee will begin to accrue holiday entitlement as soon as they start working.
  • Holiday entitlement is unaffected by maternity, paternity or adoption leave – an employee can still accrue holiday entitlement during these periods.
  • Under an accrual system employees get a twelfth of their holiday entitlement each month.
  • An employee’s contract should state how many days leave they can carry over to the next year. If an employee is off work due to sickness, maternity or paternity leave they can carry over some or all of the untaken holiday entitlement to the next leave year.
  • If an employee is off sick and is unable to take their annual leave, employers must allow the employee to carry over a maximum of 20 out of their given 28 days holiday entitlement to the following year’s leave.

In the case of an employee that is leaving their job, the employee may be able to take whatever entitlement is left of their Statutory Annual Leave during their notice period. If an employee has already taken too much of their annual leave, an employer must not take money from the employee’s final pay without written agreement between the employer and employee. An employer must pay untaken Statutory Annual Leave to an employee when an employee leaves their job.

This information is intended as a referencing guide only. Please visit the HMRC website for more detailed information and current updates.

At A.S.A.P our payroll service is fully compliant with holiday pay. If you would like to speak to us about payroll services or have a query about holiday pay, please speak to one of our friendly team now on 01621 829632.

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