The summer holiday season is upon us. However, before we get there, there are a few things to think about and plan for. In this feature, I will walk you through some holiday-related issues that can arise during the summer months and the law that applies to them.
Background
The Working Time Regulations 1998 (WTR) set out the law on annual leave in the UK, supported by case law. These Regulations have undergone significant changes in recent years, including the introduction of rolled-up holiday for part year and irregular-hours workers for holiday years starting on or after April 2024.
Over the summer months, the likelihood of more employees wanting to take annual leave within a concentrated time is increased. For that reason, the potential for issues arising is also increased. Below, we look at some of those issues and how they can be resolved.
Annual leave and rolled-up holiday pay
When an employee is paid rolled-up holiday pay (RUHP), they get paid their holiday pay at the same time as they receive their regular wages, so the payments are “rolled” together. This is done by calculating 12.07% (or more, if more than statutory annual leave is given under the contract) of total pay for work done in the pay period and paying it on top of their wages in each pay packet. As a result, they are not paid when they take their annual leave. However, that does not mean that they do not have to take their annual leave.
Paying RUHP is only one part of the holiday equation. The other part, the actual taking of the leave, must also take place for an employer to meet its obligations under the WTR. As such, employees who receive RUHP should still be able to book and take annual leave throughout the year and employers must have in place a system that allows them to do this.
Under the Employment Rights Bill, which is currently going through Parliament on its way to become law, a new requirement for employers to keep records relating to their compliance with the obligations under the WTR for six years will be introduced. This explicitly includes the entitlement to annual leave of irregular and part-year workers (including employees), who are the only ones permitted to be paid RUHP.
Cancelling annual leave
Back in 2023, wildfires in Greece caused major issues which led to the cancellation of many holidays. This prompted the question — must employers allow an employee to cancel their annual leave?
Under the law, when a request to cancel a period of holiday comes in, employers should consider whether they are able to but there is no obligation to allow it. The circumstances may dictate the decision; short-notice cancellations may be tricker because cover may have already been organised which cannot now be changed, whereas if plenty of notice is given of the cancellation request, it may cause less disruption to agree to it. Whatever is decided, it must be reasonable. Failure to ensure this could lead to damaged employee relations and the possibility of problems in the future.
Where the cancellation request cannot be accepted as a whole, it may be that some of the days can be cancelled, allowing the employee to take at least some of the leave at another time.
Whatever the decision, it should be communicated to the employee as soon as possible so they can make an informed choice as to their annual leave. If cancellation is permitted, the employee should be told that they are still expected to take all their annual leave in the current annual leave year and that, if in accordance with organisational policy, any leave not taken in the current leave year will be lost. If some carry-over is permitted, the employee should be reminded of the limitations of this.
There may be circumstances where an employer decides they must cancel an employee’s annual leave; however, this must only be done where it is necessary as a last resort.
To cancel annual leave under Regulation 15(2)(b) of the WTR, an employer can order an employee not to take holiday on specified dates, by giving as many days’ notice as the period of holiday to which the notice relates, effectively cancelling previously agreed annual leave.
Cancelling annual leave unnecessarily is likely to create a sense of ill-feeling among staff, especially if they have already planned for how to spend their time off. This could lead to calls for compensation from employees. Furthermore, those with two years continuous service may be able to claim constructive dismissal in these situations by claiming there has been a breach of the implied duty of mutual trust and confidence.
Sickness during annual leave
If an employee is unwell during or immediately prior to pre-booked annual leave, they may be unable to take the leave as they had planned. Where this happens, they can ask that any day’s holidays lost whilst they were sick be taken at a later date.
Any such period of sickness will have to be proven and is subject to the usual rules governing the entitlement to Statutory Sick Pay, ie for a seven-day period of sickness, a fit note would be required. The employee will have to report their sickness in accordance with any sick leave policy. It is recommended that the employee receives written confirmation of their remaining holiday entitlement should this happen. If it is not possible to take all the re-gained holiday during the same holiday year, then an employee could be permitted to carry holidays lost due to sickness absence forward into the next holiday year.
Annual leave reminders
Under Regulation 13 of the WTR, employers must give their staff a reasonable opportunity to take leave, encourage them to do so and inform them that any leave not taken by the end of the leave year will be lost. Now is a good time to do just that — after all, for employers with a January–December leave year, we are now almost half the way through. Failing to do this could result in the untaken leave being carried over to the next annual leave year, so it’s in employers’ best interest that doesn’t happen to avoid the problem rolling to the next annual leave year.
It’s recommended to remind staff that they should be taking all their annual leave in the year it is accrued and that should they fail to do so, that entitlement will be lost when the next leave year starts. Providing information on the days that annual leave can be booked and a reminder of the process to do this can prompt staff to start booking their leave to avoid the disappointment of not getting the days they want. Should there be any reasons that might make employees reluctant to take leave, measures that are being/will be taken to resolve them should also be communicated to staff to further encourage annual leave uptake.
Takeaway
Making sure employees are aware of their holiday entitlement and how to take it is an essential part of compliance with the WTR — but there’s more to it than that. These requirements are only a part of an employer’s obligations when it comes to holiday and other rules, such as for sickness during annual leave and cancelling leave, also need to be adhered to.
Please get in touch with Carrie if you have any questions!
