Holiday pay question

[Bay]

Hi,

I have started a new company and I'm employing two people on the books. It's bad timing we have Christmas suddenly to content with. They both want two weeks off but I'm going to struggle with providing holiday pay as I won't be able to bill clients enough money in the month of December.

Are they entitled to the holiday or should they have accrued it before taking it? I suggested I could pay for one week and they could take off one week as unpaid. One was not happy about this.

Many thanks in advance,

 

[intheTRADE]

They need to have accrued the holidays to take them as paid holidays. Otherwise they work, or yoiu allow them unpaid time off

How long have they worked for you?

 

[Mr D]

Surely you are paying them for holiday at same rate they are paid for working?

Will you have this problem any other month when they want time off?

Be honest with them.

May be worth having a policy set up whereby you limit the number of staff on leave at once if it impacts cashflow that much.

 

[Bay]

They need to have accrued the holidays to take them as paid holidays. Otherwise they work, or yoiu allow them unpaid time off

How long have they worked for you?

Thanks, that clarifies my thinking.

They have worked for me for a couple of weeks.

 

[Bay]

Surely you are paying them for holiday at same rate they are paid for working?

Will you have this problem any other month when they want time off?

Be honest with them.

May be worth having a policy set up whereby you limit the number of staff on leave at once if it impacts cashflow that much.

It's only a problem now because of Xmass. Next year I will have accrued enough profit to cope with this (if I haven't gone bust ).

 

[fisicx]

They have worked for me for a couple of weeks.

They haven't accrued enough leave to take time off.

They will expected to come into work.

 

[Newchodge]

During their first year you can refuse to allow them paid holiday unless it has been accrued. Holiday is accrued at the beginning of each month, for the coming month, NOT at the end. If it accrues at the end the employee cannot take their full entitlement in the first year.

So on day one your employees are entitled to request paid holiday of 1/12th of 5.6 weeks.

Entitlement to request paid holiday is not the same as entitlement that their request should be agreed.

You should have clear guidelines on holiday, including, for example, that no one may take holiday unless it has been approved. Only one member of staff may be off at any one time. When the annual leave year starts and so on.

You are entitled to require that they work on every day that the business is open over the Christmas period, and should pay holiday pay for days it is closed. Unless, of course, their contracts state otherwise. They have got written contracts/ letters of appointment/ terms of service, haven't they?

 

[Sparx]

Another question to consider not asked yet, are these employees on full-time hours (~37.5) and permanent contracts? As this effects how much holiday is accrued.

But as others have said, if they've only worked for you for a few weeks - then they haven't accrued enough holiday to take 1 or even 2 weeks off!

 

[Talay]

During their first year you can refuse to allow them paid holiday unless it has been accrued. Holiday is accrued at the beginning of each month, for the coming month, NOT at the end. If it accrues at the end the employee cannot take their full entitlement in the first year.

Really ? Holiday is accrued per day, not per month. Thus, an employee leaving mid month would not have accrued a whole month's holiday.

As for not being able to take holiday, someone with 8 days accrued and who would accrue 2 more days during the forthcoming month can surely take 10 days holiday before the end of the month, thus using up all their annual allowance, if the holiday year ends at the end of that particular month.

 

[Newchodge]

During the first year of employment an employee is entitled to a months' worth of paid holiday on the day they start work, and an additional months' worth on the monthly anniversary of the date they start. If they leave during their first year after, say, 5 months and 1 day's work, they are entitled to 6 months' worth of holiday.

If they leave after the end of their first year you caculate their holiday entitlement on a daily basis - being employed for 180 calendar days gives 0.494% (180/365) of the annual holiday entitlement.

One of these is covered in section 15 of the working time regs, and one in section 14 - I can never remember which way round it is.

 

[Awinner2]

One change coming in from 6th April 2020, all employees will be entitled to have their holiday pay calculated as the average over the previous 52 weeks (not 12 weeks as currently), Especially pertinent if paid by salary plus overtime/bonuses/commissions, etc. There are other major changes for new starters and agency workers too. They must have written conditions of employment from the first day of working amongst other changes in employment law.

 

[Chris Ashdown]

Have you had your contracts drawn up by a professional person as there is a lot of poorly written contracts around that are not worth the paper they are printed on, I would suggest that any of the employment experts on this forum would be a good place to start to get your own made up for your company, there is also often handbooks that go into far more details about things like disciplinary procedures, sick pay, safety at work, driving any company vehicles and so on

 

[GazNicki]

I have always been under the impression that you accrue your holiday pay. For the first year, you need to accrue before you can take the time off.

As a minimum, you accrue at 5.6 times your working week. So if you work 5 days per week, your annual entitlement is 5.6*5 = 28.

The rate of accrual is daily, so the number of working days in a year is 52*5 = 260

The number of holiday allowance (28) divided by the number of annual working days (260) should give the rate of accrual.

28/260 = 0.108 holidays per day worked.

If they have been employed for 4 weeks, then they have 20 days of accrual - 0.108*20 = 2.16 days.

Therefore they have accrued 2 days of holiday allowance. They could have Xmas Day and New Years day off paid. You can permit other time off, but it would be unpaid.

You are of course allowed to pay them in leiu of the accrual - but if they left their employment they may owe you money.

This should all be stipulated in the terms of employment though.

 

[Newchodge]

I have always been under the impression that you accrue your holiday pay. For the first year, you need to accrue before you can take the time off.

As a minimum, you accrue at 5.6 times your working week. So if you work 5 days per week, your annual entitlement is 5.6*5 = 28.

The rate of accrual is daily, so the number of working days in a year is 52*5 = 260

The number of holiday allowance (28) divided by the number of annual working days (260) should give the rate of accrual.

28/260 = 0.108 holidays per day worked.

If they have been employed for 4 weeks, then they have 20 days of accrual - 0.108*20 = 2.16 days.

Therefore they have accrued 2 days of holiday allowance. They could have Xmas Day and New Years day off paid. You can permit other time off, but it would be unpaid.

You are of course allowed to pay them in leiu of the accrual - but if they left their employment they may owe you money.

This should all be stipulated in the terms of employment though.

That all sounds very sensible, but it is not the law.

The law requires that an employee take their holiday entitlement during the year. If they are not entitled to their forst 2.16 days until they have worked 4 weeks they will not have accrued their full 28 days until they have worked 52 weeks, so could not take it in the year.

The law deals with this by requiring, in the first year of employment, an employee accrues 1/12th of their entitlement on day 1, a further 1/12th on the monthly anniversary of day 1 and so on so at the BEGINNING of their 12th month they have accrued 12 months' worth of holiday. In subsequent years the employee has accrued 28 days on the first day of the year.

 

[GazNicki]

That all sounds very sensible, but it is not the law.

The law requires that an employee take their holiday entitlement during the year. If they are not entitled to their forst 2.16 days until they have worked 4 weeks they will not have accrued their full 28 days until they have worked 52 weeks, so could not take it in the year.

The law deals with this by requiring, in the first year of employment, an employee accrues 1/12th of their entitlement on day 1, a further 1/12th on the monthly anniversary of day 1 and so on so at the BEGINNING of their 12th month they have accrued 12 months' worth of holiday. In subsequent years the employee has accrued 28 days on the first day of the year.

This makes sense. A simple spreadsheet could quite easily be setup to manage the accrual of the employee's too. I will bear the initial months accrual in mind when I next look into holiday allowances too.

 

[BeauLacey]

During their first year you can refuse to allow them paid holiday unless it has been accrued. Holiday is accrued at the beginning of each month, for the coming month, NOT at the end. If it accrues at the end the employee cannot take their full entitlement in the first year.

So on day one your employees are entitled to request paid holiday of 1/12th of 5.6 weeks

Does this work the same way for those weekly paid?
so day one they can request paid holiday of 1/52.29 of 5.6 weeks?

 

[Newchodge]

Does this work the same way for those weekly paid?
so day one they can request paid holiday of 1/52.29 of 5.6 weeks?

The pay frequency is irrelevant. Hourly, daily, weekly, fortnightly, 4-weekly, monthly paid all have the exact same right to request 1 month's worth of holiday on day 1.

 

[Mr D]

The pay frequency is irrelevant. Hourly, daily, weekly, fortnightly, 4-weekly, monthly paid all have the exact same right to request 1 month's worth of holiday on day 1.

And a good thing too.
Sometimes people have a need for holiday in first few weeks of a new job. Pre booked stuff, appointments, weddings etc.