Pay - an overview of obligations
Paying workers holiday pay
As an employer, you are required to allow each worker to take 5.6 weeks' paid annual leave.
This is equivalent to, for example:
- 28 days for those who work five days a week
- 14 days for those who work 2.5 days a week
The entitlement is capped at 28 days regardless of the number of days worked per week.
Use our interactive tool to calculate your employees' paid annual leave entitlement.
Bank and public holidays
The minimum paid annual leave entitlement includes bank and public holidays - the number of these vary across the UK.
Find out bank and public holiday dates on the Directgov website - Opens in a new window.
Workers have no statutory right to take a day's leave on any bank or public holiday. In some industries, eg retail, workers may be required to work these days and take their holidays at other times.
Therefore, you should set out in the worker's contract whether or not these days are part of their holiday entitlement.
Carrying over annual leave
Workers must take at least four weeks' annual leave - any outstanding leave can be carried over to the next leave year (for one year only) but cannot be paid in lieu. You will only be able to make a payment in lieu for outstanding holiday when a worker's employment ends.
Rates of pay
The rate of holiday pay is generally the normal rate for the worker. So for those workers who are paid monthly, their annual salary is divided into 12 equal payments and when they take holiday it has no effect on their pay slip.
You only have to work out a special payment where your workers have varying pay rates, such as piece work. In those cases, the holiday pay will be equal to the average rate over the 12 weeks before the holiday.
This only applies to the statutory holiday periods. So if you offer extra leave over and above the 5.6 weeks (including bank and public holidays) the rate of pay for these can be whatever is agreed with your employees.
In reality, holiday pay, like normal pay, is dictated by market rates. If you offer less annual leave and lower rates of pay than your competitors, you may find it difficult to recruit and/or retain the best workers.
Rolled-up holiday pay
It's unlawful not to pay a worker while they are on holiday and instead include an amount for holiday pay in the hourly rate of pay - something known as 'rolled-up holiday pay'.
You must therefore always pay a worker their normal pay while they are actually taking their leave.
Subjects covered in this guide
- Issuing pay statements
- Statutory maternity, paternity and adoption pay
- Statutory sick pay
- Guarantee pay - entitlement, calculation and exemptions
- Guarantee pay - calculation, enforcement and contractual issues
- Complying with the national minimum wage
- Rates and calculation of the national minimum wage
- Paying workers holiday pay
- Making deductions
- Calculating final pay
HMRC Employer Helpline
08457 143 143
Acas Helpline
08457 47 47 47
Actions
- Bank and public holiday date information on the Directgov website - Opens in a new window
- Use our interactive tool to calculate your employee's annual leave entitlement
- Holidays and holiday pay advice on the Acas website - Opens in a new window
