The law on statutory holiday, introduced in 1998, has now matured and there have been a number of recent decisions which, taken with the forthcoming increase to statutory holiday entitlement, have brought this topic into focus.
The increase in entitlement will be introduced in two stages: the initial increase in October 2007 is from 4 weeks to 4.8 weeks (for a full time employee an increase from 20 days to 24 days) and there will be a further increase to 5.6 weeks (28 days) in April 2009. The maximum entitlement is expressed to be 28 days so an employee who is contracted to work more than 5 days a week will have his entitlement capped at 28 days.
In the holiday year which straddles the increase date, the total entitlement should be calculated by taking both parts of the year separately and working out the entitlement for both parts. The Government have promised to publish online calculators to assist in working this out.
It is worth noting that, although the reasoning for the increase was to give employees a right to four weeks holiday in addition to bank holidays, the new entitlement does not require any of the holiday to be taken on bank holidays. Holiday which is taken on bank holidays does count against the entitlement but employers still have the right to require employees to work on bank holidays if the contract provides for this.
The increase throws up interesting issues for part-timers. The guidance for dealing with part timers is to give them a pro-rata entitlement based on a full-timer’s total entitlement including bank holidays: if the part-timer’s normal working day falls on a bank holiday when they are not required to work, this counts as a day’s holiday; if the part-timer does not normally work on a bank holiday, they will be able to take that part of their holiday entitlement another time. However, a recent case in Scotland decided that a part-timer who did not work Mondays was not entitled to be compensated for losing out on Bank Holiday Mondays because all employees who did not work Monday were treated the same, whether they were full-time or part-time. In that case the employer operated a 7 day a week business and so a full-timer who did not work Mondays was also not compensated for missed Bank Holidays and there was no less favourable treatment on the grounds of part-time status.
One issue which has been before the courts on a number of occasions is rolled-up holiday pay but there is still no definitive answer. The European Court of Justice has decided that it is unlawful to roll up holiday pay into normal pay but, if an employer has done this, the amount of the rolled up holiday pay can be used to offset the entitlement to holiday pay. Quite what this means is unclear but the safest approach is not to roll up holiday pay. This can be problematic where the employee is employed on a short-term contract and is needed to work for the duration of the contract. There has been a recent case which has approved an alternative way of addressing this issue: the worker was engaged on a six day a week basis but every fortnight was required to take holiday on the Saturday. This resulted in the employee not having any holiday entitlement on the other days and having no accrued entitlement on termination of the contract. As an employer is permitted to specify when holiday can be taken, this arrangement was held to be lawful.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
