After they have worked for an employer continually for 12 months and employee is currently entitled to three weeks paid holiday in addition to Stautory holidays .
What are the changes leave entitlements after 1 April 2007?
An employee, after 12 months working for you, will be entitled to 4 weeks paid leave per year.
Can you give me some practical examples?
John began working for his employer on 30 March 2006. This means his date of entitlement is 30 March 2007 and on that date he is entitled to 3 weeks annual leave. On 30 March 2008 he is entitled to 4 weeks annual leave.
Rosie began working for her employer on 7 August 1998. She has a clause in her employment agreement stating she is entitled to 4 weeks annual leave after she has worked for her employer for 5 years, and she has been entitled to 4 weeks annual leave pursuant to that clause since 7 August 2003. Rosie’s entitlement under the Holidays Act 2003 is that she must be allowed 4 weeks annual leave when she has accumulated this, which, if she has taken all of her leave allowed, will be on 7 August 2007. She is not entitled to 5 weeks annual leave because she has been entitled to 4 weeks from her current employment agreement unless that is specifically agreed to by her employer and this variation recorded in writing.
Gary began working for his employer on 12 May 2006. He is not yet entitled to any annual leave, as he has not yet been working for his employer for 12 months. However, on 12 May 2007 he will be entitled to 4 weeks annual leave, and if he leaves his employment prior to that time, or 1 April 2007, he will be entitled to be paid out for holidays at 6% of his gross earnings. The repercussions regarding the change to 8% after 1 April 2007 will be addressed next week.
Do I have to pay holiday pay at 6% or 8%?
Currently, when an employee leaves employment, payment of 6% of an employee’s gross earnings needs to be paid to them for any period of time that they have worked between the last time they were entitled to annual holidays and their employment termination date. Following 1 April 2007, this needs to be increased to 8% of their gross earnings.
When is holiday pay calculated at 8%?
The 8% holiday pay is to be calculated from the employee’s last anniversary date, even if that anniversary is prior to 1 April 2007, if they leave employment after 1 April 2007.
If I employ someone prior to the law change, what is their leave entitlement?
If someone is employed for example on 16 October 2006, any calculation is at 6% until 1 April 2007. However, the employee’s accrual would need to be recalculated at 8% from 16 October 2006 on 1 April 2007. This employee would not be entitled to 4 weeks leave until 16 October 2007. If the employee leaves their employment on 31 March 2007 the employee would only be entitled to holiday pay calculated at 6% from 16 October 2006 but if the same employee leaves on or after 1 April 2007 then they are entitled to holiday pay calculated from 16 October 2007 at 8%.
What if an employee resigns before the change in the law?
If an employee finishes with you prior to 1 April 2007 then they are entitled to any annual holidays they have owing to them and payment at 6% of their gross earnings for any period of time they worked over their date of entitlement or anniversary of starting in your employment.
What if an employee resigns after 1 April 2007?
If an employee began working for you before 1 April 2007, for example on 1 November 2005 and they leave your employment after this date, for example on 1 August 2007, they are entitled to be paid for three weeks annual holidays on 1 November 2006, their date of entitlement and payment for any outstanding annual holidays that they have on 1 August 2007 and payment at 8% of gross earnings for the nine month period between 1 November 2006 and 1 August 2007.
What if the Employee is already entitled to 4 weeks leave y in their Employment Agreement, do they now get 5 weeks?
This is the most interesting question that comes out of this legislation. My opinion, for what its worth, is that if an agreement says that an employee is entitled to an extra weeks holiday in addition to that provided by the Holidays Act (e.g. Long Service Leave) then the employee is entitled to 5 weeks holiday in all. If the Individual Employment Agreement just says that the employee is entitled to 4 weeks holiday then in my view they stay at 4 weeks and don’t go to 5 weeks ( unless the employer agrees to amend the Agreement )
