Employees have the right to ‘statutory annual leave’ (paid holiday).
This is the case whether they work:
full time
part time
under a zero-hours contract
The number of days’ holiday someone gets depends on:
how many days or hours they work
any extra agreements they have with their employer
Employees ‘accrue’ (build up) holiday from the day they start working, including when they’re on:
a probationary period
sick leave
maternity, paternity, adoption or shared parental leave
When to ask for holiday
Employees should ask for their holiday dates as far in advance as possible, This is so the employer can make any arrangements needed.
Employees should ask for holiday at least twice the amount of time beforehand as the amount they want to take off. For example if an employee wants 10 days off they’ll need to ask at least 20 days before.
This is unless their employment contract says they must give more notice.
When to take holiday by
An employer can set a fixed start and end date for when employees should take their holiday entitlement in each year. This is called the ‘leave year’.
If an employer has set a leave year, they should:
tell employees
write it in the contract terms or another agreement document
For example, an employer might set the leave year to start and end alongside the financial year – 1 April to 31 March each year.
If an employer has not set a leave year, it begins from the day the employee started working for the organisation.
Employees should take their statutory 5.6 weeks’ holiday entitlement during the leave year.
In some circumstances, employees can carry over their holiday into the next leave year. Find out more about carrying over holiday.
Holiday when leaving a job
During their notice period, an employee might be able to take any holiday they have accrued.
This will depend on whether:
they can give the right amount of notice to ask for holiday
their employer lets them take the holiday
Alternatively, the employer might ask the employee to take the holiday before they leave.
How much holiday an employee has depends on how far through the leave year they end the job.
If an employee has any holiday entitlement left when they leave, their employer must add this holiday pay to their final pay. This is sometimes called ‘payment in lieu’ of taking holiday.
An employee might have taken more holiday than their entitlement by the time their job ends. In this situation, the employer can take money from their final pay. This must be agreed beforehand in writing. This is sometimes known as a ‘payback clause’.
The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations.
Definition of an irregular hour worker and a part-year worker
How a worker is classified will depend on the precise nature of their working arrangements. We would encourage employers to ensure that working patterns are clear in their workers’ contracts.
The government has defined irregular and part-year as the following:
Irregular hours workers
A worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.
Part-year workers
A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid. This includes part-year workers who may have fixed hours.
Holiday entitlement for irregular hours workers and part-year workers
How statutory holiday entitlement is accrued
For workers who are not irregular hours or part-year workers, there is no change in how their statutory holiday entitlement is accrued. The method remains so that in the first year of employment, workers receive one twelfth of the statutory entitlement on the first day of each month. After the first year of employment, a worker gets holiday entitlement based upon their statutory and contractual entitlement. Their entitlement will be based upon the proportion of a week which they are contracted to work. This is known as ‘pro-rating’.
For leave years that begin before 1 April 2024, holiday entitlement will continue to be calculated in the same way for irregular hours and part-year workers. Use the holiday entitlement calculator to work out entitlement.
For leave years beginning on or after 1 April 2024, there is a new accrual method for irregular hour workers and part-year workers in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period.
The accrual method to work out entitlement will apply to an agency worker if the agency worker’s arrangements fall within the meanings of both a ‘worker’ (as already defined) and either an ‘irregular hours worker’ or a ‘part-year worker’, as per the new definition in the Working Time Regulations.
An agency worker who is a ‘worker’ but not an ‘irregular hours worker’ or a ‘part-year worker’, will continue to accrue leave at one twelfth of their entitlement at the start of each month during their first year of employment.
Statutory paid holiday entitlement is limited to 28 days. For example, staff working 6 days a week are only entitled to 28 days’ paid holiday.
If an irregular hours/ part-year worker is paid weekly and works 4 hours a week or less, then it may be appropriate for the employer to round up to the next half hour or hour to ensure the worker accrues holiday entitlement.
More details and helpful examples can be foundhere
Information you need to work out your employee’s Statutory Maternity Pay:
the date the baby’s due — from your employee’s MATB1 form
your employee’s intended start date for Statutory Maternity Pay, if they have given you one
your employee’s gross pay and the dates they were paid
confirmation that your employee’s gross earnings are liable to employer’s Class 1 National Insurance contributions or would be but for the employee’s age or level of earnings
Work out average weekly earnings
Average weekly earnings must include all earnings on which Class 1 National Insurance contributions are due, or would be due if they were high enough. Statutory Maternity Pay entitlement depends on your employee’s average weekly earnings in the ‘relevant period’. The average weekly earnings in the relevant period must not be less than the Lower Earnings Limit for National Insurance contributions which applies at the end of the qualifying week:
Lower Earnings Limit for 2023 to 2024 is £123
Divide all earnings paid in that relevant period by the number of days, weeks or months in that period.
The relevant period
This is usually the 8 week period before the qualifying week.
The end of the relevant period is the last normal payday on, or before the Saturday of the qualifying week.
For babies born before or during the qualifying week, the 8 week relevant period is the period between the last normal payday on or before the Saturday of the week before the baby is born, and the day after the last normal payday falling at least 8 weeks before.
The start of the relevant period is the day after the last normal payday falling at least 8 weeks before the end of the relevant period.
Example for an employee who is paid weekly
If an employee is paid weekly and the baby is due on 23 March 2024:
Qualifying week
Payday
Last payday at least 8 weeks before the end of the relevant period
Last payday on or before the Saturday of the qualifying week
3 December 2023 to 9 December 2023
Friday
13 October 2023
8 December 2023
The relevant period is 14 October 2023 to 8 December 2023.
Add up all the earnings paid between 14 October 2023 to 8 December 2023 and divide by 8 (the number of weeks in the relevant period).
Do not round the figure up or down to whole pence.
Example for an employee who is paid monthly
If an employee is paid monthly and the baby is due on 23 March 2024:
Qualifying week
Payday
Last payday at least 8 weeks before the end of the relevant period
Last payday on or before the Saturday of the qualifying week
3 December 2024 to 9 December 2023
Last working day of the month
29 September 2023
30 November 2023
The relevant period is 30 October 2023 to 30 November 2023.
Add up all the earnings paid between 30 October 2023 and 30 November 2023:
divide by 2 (number of months in the relevant period)
multiply by 12 (number of months in the year)
divide by 52 (number of weeks in the year)
Do not round the figure up or down to whole pence.
Weekly paid employees without a whole number of weeks in the relevant period
This may happen if you bring forward your employee’s normal payday because of bank holidays at Easter or Christmas. Divide the earnings by the number of weeks wages actually paid, not the number of weeks in the relevant period.
Employees paid multiples of a week
This may happen if you pay your employee fortnightly or 4 weekly. Divide the earnings by the number of whole weeks in the relevant period.
Monthly paid employees without a whole number of months in the relevant period
Work out the number of rounded months as follows:
count the number of whole months
count the numbers of odd days
Round up or down as follows:
February — 14 days or less round down, 15 days or more round up
any month except February — 15 days or less round down, 16 days or more round up
Divide the earnings by this number of rounded months.
Employees not paid in a regular pay pattern
Divide the earnings by the number of days in the relevant period and multiply by 7.
Mistimed payments
This only applies to regular payments of earnings paid other than on their normal date, such as due to a bank holiday.
A mistimed payment:
occurs when the date of the actual payment of earnings is made earlier or later than the normal contractual payday, such as an annual holiday
should not be confused with a payroll error, where a mistake is made in the payroll resulting in a shortfall of pay when working out the average weekly earnings
Divide the total earnings in the relevant period by the number of weeks wages actually paid.
Overpaid or underpaid earnings during the relevant period
Always calculate average weekly earnings based on all earnings actually paid to the employee within the relevant period, regardless of any over or underpaid wages in that period. Where over or under payments of wages occur within the relevant period, you must include the overpaid or underpaid amount in the average weekly earnings calculation for deciding if Statutory Maternity Pay is due.
Work out Statutory Maternity Pay
When you have worked out the average weekly earnings, work out how much Statutory Maternity Pay is due and pay it on the same day that you would normally pay wages and for the same period.
Statutory Maternity Pay is a weekly payment. Statutory Maternity Pay pay weeks start with the first day of the Statutory Maternity Pay pay period, so an Statutory Maternity Pay pay period that starts on a Wednesday will have pay weeks within the pay period which runs from Wednesday to Tuesday the following week.
Statutory Maternity Pay is payable:
90% of the employee’s average weekly earnings for the first 6 weeks
£172.48 or 90% of their average weekly earnings (whichever is lower) for the remaining weeks
Statutory Maternity Pay paid part weekly
You can pay Statutory Maternity Pay in part weeks if it helps to align the payments to your employees normal pay period. Divide the weekly rate by 7 and multiply by the number of days for which Statutory Maternity Pay is due in the week or month. For example, if the pay period covers the end of one month and the beginning of the next (2 days in April and 5 days at the beginning of May) then pay two-sevenths in one month and five-sevenths at the beginning of the next month.
Contractual benefits and Salary Sacrifice
The calculation of average weekly earnings for Statutory Maternity Pay is based on earnings which are subject to Class 1 National Insurance contributions. Some contractual benefits, such as childcare schemes provided by you, may be exempt from PAYE tax and National Insurance contributions. The value of childcare vouchers provided during the maternity pay period should not be deducted from the Statutory Maternity Pay. Statutory Maternity Pay must be paid in full.
Your rights – As an employee you’re allowed time off to deal with an emergency involving a dependant. A dependant could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care.
How much you get – You’re allowed a reasonable amount of time off to deal with the emergency, but there’s no set amount of time as it depends on the situation. Example – If your child falls ill you could take time off to go to the doctor and make care arrangements. Your employer may then ask you to take annual leave or parental leave if you want to look after your child for longer. Tell your employer as soon as possible how much time you’ll need so it can be agreed.
Limits on time off – There are no limits on how many times you can take time off for dependants. Your employer may want to talk to you if they think time off is affecting your work.
Pay – Your employer may pay you for time off to look after dependants but they don’t have to. Check your contract, company handbook or intranet site to see if there are rules about this.
Exceptions – You can’t have time off if you knew about a situation beforehand. For example you wouldn’t be covered if you wanted to take your child to hospital for an appointment. You might get parental leave instead. Check your employment status to see if you’re classed as an ‘employee’.
Compassionate leave – If you aren’t given time off for dependants, your employer may allow you ‘compassionate leave’ – this can be paid or unpaid leave for emergency situations. Check your employment contract, company handbook or intranet for details about compassionate leave.
Your rights – As an employee you’re allowed time off to deal with an emergency involving a dependant. A dependant could be a spouse, partner, child, grandchild, parent, or someone who depends on you for care.
Derby Community Accountancy Service 