Just Employment

Holiday Pay Law

Employees and self-employed ‘workers’ have holiday rights under the Working-Time Regulations 1998 (‘the WTR’) and also under their employment contracts, where these are more generous than the minimum statutory provision. The WTR, which is an off-shoot of the Health and Safety legislation, creates a positive duty on employers to ensure that employees and ‘workers’ receive sufficient paid leave.

“Thank you very much for your very quick response.” – Ms P M, Director, National Charity

This note uses the term ‘workers’ to mean employees and self-employed people who work personally for employers otherwise than in the course of their business. For more information, see ‘employment status’.

Every full-time worker is entitled to:

  • 5.6 weeks (28 days) paid leave each year, as the statutory minimum entitlement
  • Payment for any accrued but untaken leave at termination of employment

The European Court of Justice (‘ECJ’) has recently decided that a worker who is sick whilst on holiday is entitled to replacement holiday: Pereda v Madrid Movilidad SA (C-277/08). This is because holiday is to allow for rest and relaxation; and sick leave is to allow recovery from illness. Employers are advised to review their sickness reporting policy for workers on holiday.

The ECJ has also decided that workers on long-term sick leave are entitled to accrue annual leave, even if that has to be taken in the following leave year: Schultz-Hoff v Deutsche Rentenversicherung; Stringer v HMRC 2009 ICR 932. This raises a host of practical issues, where the law is as yet uncertain. For many employers it may now be too costly to keep a worker on the books for months on statutory sick pay.

Unions are bringing successful employment tribunal claims for accrued holiday pay on behalf of workers who have been treated as self-employed contractors (such as construction workers). This is a surprise to employers, who now have to budget for unforeseen costs.

If you are an employer or employee with a query relating to holiday pay law, we can help.

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