Understanding annual leave rights is key for both employees and employers. With updates to UK employment laws in 2024, it’s essential to stay informed about what’s changed and how it affects you. Here’s an easy-to-follow breakdown of annual leave rules and what they mean for businesses and employee’s. 

Employee Entitlement 

All UK employees are entitled to a minimum of at least 5.6 weeks of paid holiday each year under the Working Time Regulations. Some companies might offer more, but this is the legal minimum.  The standard calculation remains: 

• Full-Time Employees: 28 days (5.6 weeks) per year 

• Part-Time Employees: Entitlement is proportionate to the number of days or hours worked weekly 

Latest Changes 

In January 2024, the UK government introduced reforms to simplify holiday entitlement and pay calculations. These changes aimed to provide clarity, especially for workers with irregular hours. This new legislation has clarified certain aspects of annual leave calculations: 

• Better Calculations for Irregular Hours: Employers must now follow a more standard method for working out leave for people on casual or irregular hours, like zero-hours contracts. Holiday pay must reflect the employee’s normal remuneration, which includes regular overtime, commission, and other allowances beyond basic salary. This ensures fair compensation during holiday periods. 

• Carry-Over Rules: If someone couldn’t take their holiday due to illness or parental leave, they can roll it over to the next year. The rules now explain how to handle this properly. 

• Focus on Record-Keeping: Employers are being encouraged to keep digital records of leave entitlements and usage, which makes it easier to stay compliant and to calculate actual holiday payments. 

These changes aim to help employees understand and access their leave while ensuring employers stay on the right side of the law. 

Additionally, the Employment Rights Bill, expected to become law by 2026, proposes further enhancements, including stronger protections against unfair dismissal and improved conditions for various types of workers.  

Part-Time Employees 

Part-time employees are entitled to the same 5.6 weeks of holiday as full-time employees but on a pro-rata basis. For example, if a part-time employee works three days a week, their annual leave entitlement will be 16.8 days (5.6 weeks x 3 days). Employers must ensure that part-time workers are not treated less favourably compared to their full-time counterparts. 

Zero-Hours Employees 

Zero-hours workers, who often have irregular schedules, are also entitled to annual leave. Their entitlement is calculated based on the hours they work. A common method is using the accrual rate of 12.07% of hours worked to determine holiday entitlement. Employers must maintain accurate records of hours worked to ensure proper calculations are made. 

Employer Obligations 

Annual leave begins to accrue from the first day of employment, those employees on sick leave, maternity, paternity or adoption leave continue to accrue holiday .  

The statutory leave (5.6 weeks cannot usually be carried over unless: 

• You allow this in the contract of employment 

• The employee was unable to take the leave due to exceptional circumstances (e.g. sickness or maternity / family leave) 

Any employee that is prevented from taking their holiday due to long term sickness, may carry over leave for up to 18 months. 

Employees cannot be paid instead of taking leave, except when they are leaving a job and they have accrued but not taken their holiday entitlement.  

What Should Employers Do to Stay Updated? 

To keep things running smoothly and legally, employers should: 

• Regular Policy Reviews: Employers should regularly review their holiday policies to ensure compliance with the latest regulations. 

• Audit Payroll Systems: Employers should audit their payroll systems to ensure that holiday pay accurately reflects all relevant earnings. 

• Train Managers: Managers should be trained on the updated employment legislation and how it impacts entitlement and pay calculations. 

• Communicate with Employees: Transparent communication about entitlements and any changes in policy helps to avoid disputes and fosters trust. 

At View HR we can help to audit your current annual leave practices, provide expert guidance and support you in creating or updating your existing policies to ensure compliance with the latest UK employment legislative changes and we can also support you with any relevant training to ensure that everyone understands their responsibilities and obligations.