UK Annual Leave Regulations and Entitlement Rules

Over the last few years, there have been significant changes to annual leave regulations. These now state that regular overtime and commission payments need to be included.

The Working Time Regulation 1998, means that most workers in the UK are entitled to paid holiday or statutory leave entitlement also known as annual leave.

Who Can Take Annual Leave?

The workers that are generally entitled to annual leave are:

  • Workers with permanent employment or regular hours.
  • Workers with irregular hours.
  • Agency workers.
  • Workers on zero-hour contracts.

Annual Leave Meaning UK

Under the UK employment rights aspects of annual leave or paid holiday include:

  • To be paid for leave.
  • Ability to accrue leave during maternity, paternity and adoption leave.
  • Build up holiday whilst off sick.
  • Request holiday to coincide with sick leave.

How Is Annual Leave Calculated?

Annual leave starts to accrue when a worker starts employment. Therefore, employers can use either an accrual system or a leave year system that dictates how much leave the staff of a business should get.

The leave year for which annual leave runs can depend from employer to employer.

In a lot of cases, it will be from the beginning to the end of the year or follow the tax year, April until April.

What is an Annual Leave Accrual System?

An accrual system is worked out based on the first year of a staff members employment. The employee will get one-twelfth of leave in each month. 

Workers that work a 5 day week receive 28 days or 5.6 weeks of holiday per annum.

If an employer chooses to base annual leave on the accrual system, after the third month in employment the employee would be entitled to 7 days leave. This is calculated with the formula:

  • 28 days ÷ 12 × 3 

For part-time get annual leave pro-rata which works the following formula is used to calculate allowance:

  • Amount of days worked per week X 5.6 + days of allowance per year.
  • For example, 2 days worked per week X 5.6 = 11.2 days allowance per year.

Are Bank Holidays Part of Annual Leave?

An employer may include bank holidays as part of annual leave entitlement. However, bank or public holidays do not have to be given as paid leave.

If a person works irregular hours this can be a shift worker, they are entitled to paid time off for every hour that they work.

Can We Give Employees More Leave?

An employer can choose to give an employee more leave than the legal minimum.

Although they then do not have to apply all the rules that apply to statutory leave to the extra leave.

For example, a worker might need to be employed for a certain amount of time before they become entitled to it via contractual stipulations.

What is Annual Leave Carry Over?

Like the contractual allowances of extra leave, a contract can state in the event of being unable to take paid annual leave how many days can be carried over into the next year of annual leave.

If a full-time worker is allowed 28 days by law, they can carry over a maximum of 8 days leave.

However, if the worker is entitled to more than 28 days leave in the case of extra leave, it is at the discretion of the employer to carry over any subsequent leave.

How Does Covid-19 Affect Holiday Entitlement?

With the current pandemic, rules on annual leave have been relaxed temporarily and with immediate effect.

The Working Time (Coronavirus) (Amendment) Regulations 2020 means that any holiday that cannot be taken due to the pandemic may be carried over for the next 2 years.

This is to ensure people that are in employment that is affected by Covid-19 are afforded the rights laid out by employment laws in the UK. This can include:

  • If the worker has had to provide cover for their co-workers. They might have not had the opportunity to take leave in their annual leave year.
  • There will be too many staff shortages if too many workers are allowed to take their leave before the stipulated leave year.
  • They are classed as critical workers. These are health care or supermarket workers along with other essential workers.