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Annual Leave

Statutory Annual Leave Entitlements

As a HR Consultant I deal with numerous queries about problems employers have with the taking of annual leave each year and as we approach the main Summer holiday season, I have outlined below a reminder about the key statutory leave entitlements that employees have under the Organisation of Working Time Act 1997 regardless of status or length of time worked, as well as some helpful tips on managing the taking of leave in the business.

Statutory annual leave is calculated by one of the following three methods according to whether employees work full time/part time or irregular hours:

  • Four working weeks in a leave year in which the employee works at least 1365 hours; or
  • One third of a working week per calendar month in which an employee works at least 117 hours; or
  • 8% of the hours worked by an employee in a leave year, subject to a maximum of four working weeks.

It is important to note that full time employees may be still entitled to four weeks leave even with periods of absence during the leave year. Absences from work on most types of statutory leave do not impact on leave entitlement and similarly periods of sick leave may not reduce an employee's entitlement if they still work the required 1365 hours in the leave year. However if less than 1365 hours is worked, leave entitlement should be calculated by one of the other methods.

The leave year does not have to run on a calendar basis but it must be applied consistently e.g. 1st April - 31st March each year.

Annual leave is paid leave at the normal weekly rate of remuneration and the legislation stipulates that an employee's leave shall be paid in advance of the leave being taken. If the employee does not request payment, holiday pay may be paid at the the normal pay date.

In the event that excess leave over that accrued has been taken when an employee leaves an organisation, provision should be made in the contract of employment to deduct the over payment.

Annual Leave Policy

If you want to avoid problems with the taking of leave in your business make sure that you have a clear annual leave policy in place for all employees.  It should set out how leave is booked and approved, what notice period is required and what restrictions apply to when leave is taken in order to ensure that business operations are not disrupted unnecessarily and that disagreements do not arise unnecessarily amongst staff.

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