All employees are entitled to a statement of terms and conditions of employment to be issued to them within two months of commencing employment. This statement must include sufficient information to allow the employee to calculate his/her holiday entitlement. In most cases the statement will cover:

  • The number of days allowed in each 12 month period
  • Details of the holiday year (e.g. January to December or April to March)
  • How accrued holiday pay is calculated for leavers
  • How entitlement is pro-rated for part-timers
  • Payment for Bank and Public Holidays

Recording holidays

It is important to keep a record of all holidays taken. By doing so you will avoid disputes about time owing or the amount of accrued holiday pay to be paid to leavers. From a health and safety perspective, you will also be able to demonstrate that you have fulfilled your duty as an employer by ensuring that your employees have taken all of their statutory holiday entitlement during the holiday year.

Leavers and accrued holiday pay

Leavers are entitled to payment for holidays they have accrued whilst they were employed but have not taken. Payments should be based on the employee’s contractual entitlement or their statutory entitlement, whichever is the greater.

If the employee has taken more holidays than he/she has accrued, the overpayment can be deducted from the final salary, if the contract allows.

It is common for contracts of employment to contain the provision that, if the employee is dismissed for reasons of gross misconduct, he/she will lose the right to accrued holiday pay. Employers should note that accrued statutory holiday pay should never be withheld, even when the contract contains this provision. If, however, the employee is contractually entitled to more accrued holiday pay than the statutory minimum, the additional contractual element can be withheld but only if the contract allows.