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Annual Leave Entitlements

Statutory Annual Leave Entitlements

As we are in the middle of the main Summer holiday season, I have outlined below some key information in respect of statutory annual leave entitlements that employees have under the Organisation of Working Time Act 1997, as well as some helpful tips on managing the taking of leave, so that it does not impact on the efficient running of your 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.

Employees who may fall under more than one of the possible leave entitlement calculation methods are entitled to rely on the calculation that affords them the greater amount of leave. It is also important to note that full time employees may be entitled to four weeks leave, even with periods of absence during the leave year, as they may have worked the 1365 hours as required in the legislation to avail of their full entitlement. Absences from work on most types of statutory leave do not impact on leave entitlement and similarly periods of certified sick leave do not reduce an reduce an employee's entitlement to accrue leave during their period of absence.

The leave year does not have to run on a calendar basis or as set out in the Organisation of Working Time Act from 1st April - 31st March, but it must be applied consistently over the same 12 month period.

Annual leave is paid 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. Where employees work irregular hours or variable patterns of work, their calculation must be averaged out over their actual working pattern, in a manner that does not negatively impact on their leave entitlement.

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 any over payment made, in line with the Payment of Wages Act.

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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