The Law on Holiday Pay and Casual Workers

Employers are of course aware of the requirement to pay its workforce a certain amount of paid leave every year. But what about casual workers, are they also entitled to paid holiday leave? Let’s take a look.

Every worker is entitled to 5.6 weeks of paid annual holiday and accrued holiday pay on termination, calculated from the first day of their employment contract.

When you have workers on a 5-day, 40-hour working week, it is straightforward to calculate their entitlement to 28 days of paid holiday per year. For other regular shift patterns, it is simply a case of multiplying the number of working days each week by 5.6 to discover the yearly entitlement. However, when it comes to workers with irregular working patterns such as casual workers or those on zero hours contracts, it gets a little trickier to make the calculation. But these people are still entitled to statutory leave, so it is important to know how to work out their entitlement.

Casual worker calculations

The most straightforward way of working out holiday entitlement for casual workers is to award them accrued entitlement. In other words, they get to earn holiday entitlement based on the number of hours they have actually worked.

You will need to ensure your employees accrue the minimum of 5.6 weeks of paid leave. To do this, there is a rule you can apply. This is the ‘rule of 12.07 per cent’. This means that for each hour an employee works, 12.07 per cent of it, i.e. 7.242 minutes, is paid holiday entitlement.

So for example, workers who complete three 8-hour shifts every week for four weeks will accrue 11.5872 hours of holiday entitlement. This means they can book almost one and a half shifts off work, and still be entitled to get paid.

For businesses operating outside of regular hours, for example those that open on bank holidays, these can be included in the standard holiday allowance. So whilst there is a reduction in the number of days employees are able to book as paid leave, it does mean they get paid for bank holidays.

To improve morale and staff retention, some employers increase the amount of paid leave they offer their workers. For example, some employers will offer both the standard 28 days of paid leave, or the equivalent for casual workers, plus bank holidays.

If you are uncertain about how much leave to pay your casual workers for, or any workers for that matter, your bookkeepers will be able to help you make the calculations.

Carrying Over Annual Leave – What you Need to Know as an Employer

As an employer you will be aware that you are obliged to give your staff 5.6 weeks annual leave, or the appropriate proportion of that for part-time personnel. You can, of course, offer more than that if you want to offer a really attractive contract and compete with other companies to gain and retain a loyal and motivated team.

More Complicated Aspects

As an entrepreneur who has to cover all bases, you may find the rules on when annual leave can be carried over from one year to another somewhat fuzzy and a level of detail too far – until a situation arises when you need to know.

Did you know that only 1.6 weeks of annual leave can be carried over at your discretion, and written into the employment contract, and why that is the case? This is because that 1.6 weeks has nothing to do with EU rules. It is awarded under UK law which allows it to be carried over.

The other 4 weeks, or 28 days, are awarded under the EU’s Working Time Regulations 1998, and they cannot be carried over under normal circumstances. If you offer additional contractual leave, you need to make it clear in the written contact whether you allow this leave to be carried over.

The Out of the Ordinary

Sometimes of course, there are exceptional circumstances why annual leave cannot be taken before the end of the leave year. The most common of these is sickness. If someone develops a serious illness or has an accident that means they have to take sick leave, they may not be able to take their annual leave in time but be in need of it at a later date. In a number of court cases applying EU law, employees have been allowed to take some or all of their EU leave from a previous year.

Other exceptional circumstances can arise because of the nature of the work and whether other staff members are available, as well as the personal circumstances of the personnel concerned. Your policy on carrying over contractual leave in these kind of circumstances should be made clear in your employment contracts, otherwise it will be necessary to have a written agreement signed by yourself and the employee for each individual occasion.

While you have a certain amount of leeway in your policies on taking leave in exceptional circumstances, it is important to know the rules of law. Clearly you would be wise to write all your leave policies into your staff contracts, so that no-one can claim to be unfairly treated and everyone knows where they stand. If you are not sure you have covered everything, your local bookkeepers would be happy to take a look at the draft and give you their opinion.

Getting Your Business Ready for Summer

Summer is generally one of those times in the business calendar when requests for leave escalate. It can be a challenging time for any business owner and one for which planning ahead is essential so that you can be sure your operation continues as normal.

Currently, full time employees are entitled to 28 days of paid leave per year. Many of these employees will expect to be able to take their leave during the key holiday seasons – namely summer and Christmas – and in order to maintain high levels of staff morale, many business owners try to make provision to allow as many requests as possible to be honoured, often by shouldering the burden themselves.

However, this is not always going to be practical. It is therefore essential to plan ahead and develop policies on when leave can be taken that are fair to staff and at the same time maintain customer relations and turnover. Avoiding last minute emergencies is a key objective and the following advice should prove helpful in doing just that.

Identify Peaks and Troughs

The first thing to do is be clear on when your business tends to experience its busiest periods, and when it is generally quieter. Once you have identified your peaks and troughs you can set your leave policies around them. It may be that you have a policy that leave cannot be taken at certain times, unless there are extenuating circumstances. You may also wish to introduce a shutdown period during any particularly quiet interludes.

Plan for Seasonal Fluctuations

If your business experiences high demand during certain periods of the year, you may find it works better for you to employ a small core of staff on a permanent basis, and then take on short-term temporary workers to help you cope during the higher demand periods. Don’t forget though that agency workers are entitled to certain rights, including equal pay that falls in line with permanent employees, once they’ve been with you for 12 weeks or more.

Cross Train to be Ready for the Unexpected

There is nothing like being prepared, and having multi-skilled staff on your team is an excellent way to be ready to tackle any ‘emergency’ situation. Say for example your business experiences an unexpected boom period, and this coincides with a time when you have agreed to a number of leave requests. If you have cross-trained and cross-skilled your workforce, then anyone will be able to step in to help as required.

If you are thinking about how you will cope this summer as the many requests start to come in for leave, why not speak to your bookkeepers? They’ll be able to help you plan ahead based on historical peaks and troughs, and will also assist with cashflow forecasts so you can work out how taking on any additional temporary labour will affect your bottom line.