30 Apr 2007


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Paid Annual Leave

All you need to know about this important subject.

The new Working Time Directive came into effect on October 1, 1998 and, for the first time, entitled workers to paid annual leave and protection from working excessive hours.

The measures include four weeks' paid annual leave.

The regulations apply to workers over the minimum school leaving age, with workers defined as those with a contract of employment plus those working under other forms of contract, such as temporary workers, but does not cover the self-employed.

ENTITLEMENT
From October 25 2001 workers have a right to four weeks paid annual leave from their first day of employment, and a corresponding right to compensation for any untaken leave on termination of employment.

This does not mean that workers can take four weeks paid annual leave at the start of their employment, but if the employment ends during the first 13 weeks they will be able to claim for leave which has been accrued but not taken during this period.

Employers can introduce a system for the taking of leave to accrue during the first year of employment, at a rate of one-twelfth of the annual entitlement per month worked, rounded to the nearest half-day. This will not affect payment of any untaken leave at the end of employment. Employers and workers should agree on arrangements for taking leave, in line with the notice periods set out in the regulations.

ACTION POINTS
Employers should consider:

How much leave workers currently receive and whether it is equivalent to the entitlement under these regulations
Whether workers receive a week's pay in respect of each week of leave.

CALCULATING LEAVE
A worker is entitled to at least four weeks' paid leave each year. This is not in addition to contractual entitlements. Any existing contractual paid leave arrangements between an employer and worker count against the worker's entitlement.

LEAVE YEAR
The leave year will start on a date agreed between the employer and worker. If no date has been agreed, the leave year will start on the date work commenced.

HOW LONG IS A WEEK?
A week's leave should be equivalent to the time a worker would work in a week.

An employee working five days a week would have 20 days paid annual leave.
A part-timer, working two days a week, would have a right to eight days paid annual leave.
An employee working 24 hours a week, would be entitled to 96 hours' paid annual leave.

PUBLIC HOLIDAYS
There is no statutory entitlement to bank and public holidays. Where a worker is paid for a public holiday this will count towards their entitlement to annual leave.

HOW TO CALCULATE A WEEK'S PAY
A normal week's pay is:

For a worker with regular working hours, what they would earn for a normal working week.
For a worker whose working hours vary, their average hourly rate of pay multiplied by an average of their normal weekly working hours over the previous 12 weeks
For a worker with no normal working hours, it is the average pay received over the previous 12 weeks.

A worker's normal working hours are those fixed by their contract of employment. Overtime is not included.

ENFORCEMENT
If denied the entitlement to paid annual leave, a worker may complain to an Employment Tribunal, but as a first step an attempt should be made to settle a dispute with their employer by mutual agreement. The complaint must be made within three months of the dispute.

The Advisory, Conciliation and Arbitration Service (ACAS) has a duty to conciliate in claims. An ACAS officer will explain Tribunal procedures, the law relating to the case and try to reach a settlement between the parties without a Tribunal hearing.

KEEPING RECORDS
Actionline recommends keeping records of workers' hours and paid leave for at least two years.

FURTHER INFORMATION
An information leaflet and guidance booklet are available free from the DTI by calling 08456 000925.

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