Employee annual leave entitlements

Understanding statutory and contractual holiday allowances

First published on Thursday, Jun 04, 2020

Last updated on Monday, Mar 25, 2024

As an employer in the UK, you must provide your employees with paid holiday—meaning you're legally required to give them paid time off work.

While you're obligated to provide your employees with the legal minimum of paid holiday within a year's holiday allowance, there's no law stopping you from offering more holiday entitlement.

In today's competitive job market, offering a more generous leave entitlement as part of your employee benefits package can greatly boost your business's appeal and help attract and retain top talent.

So, whether it's the legal minimums or extra perks you offer, knowing the facts is key to keeping both your team and the law happy. To better understand your options let's break down employee annual leave in a way that's easy to understand.

What is the legal minimum holiday entitlement?

If you want to make sure your employment contracts are in line with the law,  you need to know the statutory minimum holiday entitlement for your employees.

In the UK, most workers are entitled to 5.6 weeks paid holiday a year also called statutory annual leave entitlement, which can include bank holidays.

And it's not just your full-time employees who are legally entitled to this paid holiday. Statutory annual leave extends to various types of workers, including:

  • Part-time workers
  • Zero-hours workers
  • Shift workers
  • Part-year workers
  • Term-time workers

It's important to note that while most workers are entitled to 5.6 weeks paid holiday a year, the number of days holiday they actually get can vary depending on how many days a week they work.

For example, a full-time worker who works a five-day week is entitled to 28 working days off work, while a part-time worker who works two days a week is only entitled to 11.2 days away from work.

Starting 1 April 2024, employees who work irregular hours or for only part of the year will accumulate their statutory leave entitlement differently. They will receive 12.07% of the hours they work in a pay period, up to a maximum of 28 days.

Read our guide on calculating holiday entitlements and our guide on how to calculate holiday pay for more information on how to calculate holiday entitlement and pay for your employees.

Other statutory rights of holiday entitlements

Aside from the statutory right to paid holiday, your workers have the right to:

  • Build up holiday entitlement during various types of leave such as maternity, paternity, and adoption leave
  • Build up holiday entitlement if they are off work sick
  • Make a holiday request while they are on sick leave

Employer and employee planning out annual leave on a calendar

What is contractual holiday entitlement?

When you provide your employees with paid annual leave, which is more than the statutory minimum of 5.6 weeks of paid holiday per year, it's called contractual holiday entitlement.

The number of paid holidays through contractual leave can vary based on several factors, such as the employment contract, industry norms, and company policies. But, ultimately you have the freedom to decide how much holiday you offer your employees.

It can also either be paid leave or unpaid leave and some businesses even offer unlimited paid holidays.

The beauty of contractual leave is that it is entirely customisable, as long as it meets the minimum statutory annual leave entitlements. You can create your own rules that work best for your business and employees.

Plus, by going beyond the statutory minimum of 5.6 weeks of holiday pay per year and offering additional days of annual leave, bank holidays, or other holiday-related benefits, you’ll attract and retain top talent and create a more productive and engaged workforce.

So, it's worth reviewing your current policies and considering whether you can offer a more competitive annual leave entitlement to your employees.

Frequently asked questions about holiday entitlements

Our clients ask a lot of questions about holiday entitlement, some of the  most asked questions include:

What happens if my employee doesn't use their full holiday entitlement?

If any of your employees have any unused holiday, they may be able to carry over up to 1.6 weeks of leave to the next holiday year, as long as you have a written agreement on this.

If the employee was on long-term sickness, which prevented them from taking their leave in the year it was accrued, they can carry over up to 4 weeks holiday for 18 months, covering the next one and a half leave years.

In cases where your employee couldn't take annual leave because they were on maternity leave, they can carry all of the statutory minimum 5.6 weeks over to the next leave year.

In all other situations, you're not required to allow your staff to carry over their unused annual leave.

However, you should provide your employees with a fair chance to take their leave or encourage them to do so. You should also inform your staff of the potential risks of losing their annual leave entitlement at the end of the holiday year.

If your employees aren't given adequate opportunities to take their leave, they're entitled to carry forward up to four weeks of unused holiday leave into the next leave year.

Does the legal minimum annual leave entitlement include bank holidays?

Yes, the minimum of 5.6 weeks of annual leave includes bank holidays.

However, you can choose to exclude bank holidays from your employees' statutory holiday entitlement in your employment contract, as long as your employees still get their paid holiday at another time in the holiday year.

You’re also not legally required to provide your staff with extra pay for a bank holiday if they do work on that day. Unless you have written so in your employment contract.

Is there a limit to how much holiday entitlement an employee gets?

When it comes to statutory paid holiday entitlement, the limit is 28 days. This means that if you have employees who work 6 days a week, they are still only entitled to 28 days' holiday a year. But if you choose to offer contractual annual leave there are no limits.

Can I take away contractual entitlements?

Yes, but, if you plan to change the terms and conditions of your employees’ contracts, you must first get their agreement. If they don't agree, you can begin the process of enforcing these changes by dismissing them and then immediately re-hiring them under the new terms.

However, this should only be done after exploring all other options through a consultation process and by giving the employee their full contractual notice period. Please note that you must have strong and justifiable business reasons to do so.

employer and employee agreeing over contractual holiday

Get help with your responsibilities for annual leave from BrigthHR

Managing employee holiday entitlements can be a complex task for business owners. With so many responsibilities to handle, it can be hard to keep track of everything and ensure that your team gets the time off they deserve without any issues.

BrightHR's staff holiday planner can make this task much easier.

With our smart employee holiday planner, you’ll spend less time managing your staff's paid holiday entitlements and more time focused on your business.

But that's not all, it can also help you:

Stay legal

Make your life easier with HR software that takes care of all your staff's holiday allowances, whether they work full-time, part-time, or irregular hours. Our system automatically calculates everything in line with UK holiday laws, saving you time and giving you peace of mind.

Plus, always stay up to date with UK laws and regulations for annual leave entitlements, and benefit from our 24/7 employment law advice line.

Keep everyone in the loop

Clear and transparent communication of annual leave entitlements, balances, policies, and procedures is essential for building trust and preventing misunderstandings among employees.

Our HR software comes with an app, so you can keep your staff informed from anywhere and confirm key updates with alerts and read receipts.

This will not only streamline your HR processes but also increase employee satisfaction and productivity.

Keep records

Keeping track of employee leave balances, accruals, and usage is crucial for accurately monitoring entitlements and resolving conflicts. With our software, you'll have access to unlimited HR document storage, making it easy and secure to maintain an archive of all your confidential information.

This will help you meet your legal record-keeping obligations, giving you peace of mind knowing that you have all your documents stored safely and easily accessible at all times.

Banish burnout and boost employee productivity

Our holiday planner also comes with an annual leave balance feature. Allowing you to view the complete leave entitlements of all employees in your business, along with their remaining days of leave, all in one convenient hub.

This feature provides you with immediate insights, helping you recognise when your staff need a much-deserved break.

It also helps prevent employees from hoarding their leave entitlements, ensuring  they take breaks regularly throughout the year. This way, you can avoid staffing issues during busy periods, resulting in a healthier and more productive business overall.

Create annual leave policies

Why work harder when you could work smarter, download your free annual leave policy and discover BrightBase our HR document library your go-to hub for contracts, handbooks, templates and so much more.

Empower yourself with the knowledge of managing employee holiday entitlements effortlessly. Our free webcast ‘HR Essentials: Understanding Employee Holiday Entitlements’ is designed to help you do just that.

Watch our free webcast today to learn a hassle-free approach to managing staff holidays.

Jenny Marsden

Associate Director of Service

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