10 January, 2008
New laws giving employee's an increased minimum holiday entitlement have now been in force since 1 October 2007. The Working Time (Amendment) Regulations 2007 have increased employee's minimum holiday entitlement to 4.8 weeks (24 days for someone who works 5 days a week). This is the first of two increases. The next increase, anticipated to arrive in April 2009, will result in the entitlement being increased to 5.6 weeks (28 days for an employee who works 5 days a week).
The minimum entitlement is subject to a maximum of 28 days per year and therefore workers who work more than 5 days a week still only have a minimum entitlement of 28 days.
Under the old regulations employees were entitled to a minimum of 4 weeks leave per year. Many employers gave their employees 4 weeks plus bank holidays. However some employers only gave 4 weeks including bank holidays. The purpose of the new regulations was to bring all employees up to the equivalent of 4 weeks plus bank holidays (5.6 weeks).
All employers should check how the new regulations affect their business. Employers should carefully check each individual employee's circumstances (including the wording of any contracts and policies in place). Many employers will find that they are already complying with the increased entitlement and do not need to make any changes.
The exact wording used in any contracts in place can be particularly important. Variations in the length of holiday given, whether holidays are expressed in terms of days or weeks, whether they are inclusive or exclusive of bank holidays and the number of days an employee normally works each week can make significant differences to how each employee's holidays should work and how the new regulations apply.
For example, where an employee only works part time 4 days a week, their minimum entitlement will be 19.2 days (4.8 weeks x 4 days) and will increase to 22.4 days (5.6 weeks x 4 days) in 2009. If that employee's contract already gave him an entitlement of 20 days including bank holidays, he would currently be receiving more than the minimum entitlement and no changes to his current entitlement of 20 days would be needed. In 2009 his annual leave entitlement would need to be increased to at least 22.4 days.
A further implication of the new regulations is in relation to employers replacing holidays with payments in lieu. Up to April 2009, the employer cannot replace any holiday that forms part of the old minimum entitlement (4 weeks) by making a payment in lieu. After April 2009, the employer cannot replace any part of the new minimum entitlement (which by then will be 5.6 weeks) by making a payment in lieu.
A common example of when employer's used to make payments in lieu of giving holidays is in relation to bank holidays. Some employers used to offer employees double pay instead of taking leave on a bank holiday. If an employer wants an employee to work on a bank holiday where they were entitled to leave, the employer must now allow the employee an additional day's leave at another time of year. Employer's can still pay double time on bank holidays but this cannot replace a days holiday.
The Employment Department at Forbes Solicitors has advised a number of clients on these regulations. If you are concerned about the possible impact of these regulations for your business, please contact Peter Byrne or Ruth Coffey.