Holidays for all

As foreshadowed in our early warning of 29 June, regulations have now been introduced amending the Working Time Regulations 1998 to give all workers, regardless of their length of employment, a statutory entitlement to 20 days paid holiday a year.

The effect of the Working Time (Amendment) Regulations 2001 is to give all workers an entitlement to paid holiday from the first day of their employment.

The Regulations provide that in the first year of employment this right to 20 days paid holiday a year will accrue monthly in advance, with the figure being rounded up to the nearest half day.

This means that in the first month of employment the worker will build up an entitlement to two days holiday (20 days multiplied by 1/12 giving 1.66 days – rounded up to 2 days) whereas in the eighth month of employment the worker will have built up an entitlement to 13.5 days (20 days multiplied by 8/12 giving 13.3 days rounded up to 13.5 days.

Somewhat confusingly the rounding up principle does not apply to calculating the entitlement of a worker to payment in lieu of untaken holiday on the termination of their contract. An employee who has been employed for less than a month will have built up an entitlement to two days holiday during that month but in the event that his employment is terminated during the course of the first month he would only be entitled to a payment in lieu of untaken holiday of 1.66 days.

The amendments to the Working Time Regulations do not affect the provisions which allow an employer to prevent a worker taking a holiday on a specific date or alternatively requiring them to take their holiday on or by a specific date – provided certain notice requirements are complied with.Considerable concern has been expressed by employers as to the disruptive effect of this entitlement to holiday in situations where a worker is employed on a short term fixed contract to undertake a particular project.

There is nothing however in the Regulations to prevent the employer stipulating in the contract that the holiday entitlement is to be taken at a specific time – for instance in respect of a three month fixed term contract provision could be made requiring the worker to take the last five working days of the contract as their holiday entitlement.

It should be emphasised that it is not possible to contract out of the right to annual leave. This means that an employer and a worker cannot agree in respect of say a short fixed term contract that no holiday will be taken during the term of that contract in return for an enhanced rate of pay.

Bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.