Employees who take annual holidays in advance of entitlement
Employees can ask to take paid annual holidays in advance where they do not have an entitlement – either because they have not completed 12 months of service, or because they have used all of their entitlement. In these circumstances, approval is at the discretion of the employer, unless a right to take annual holidays in advance is included in the relevant employment agreement.
The payment for holidays taken in advance is still based on the greater of the employee’s ordinary weekly pay or average weekly earnings. To calculate average weekly earnings where the employee has less than 12 months’ service, the gross earnings from starting work until the last pay period before the holiday are divided by the number of weeks worked.
To calculate average weekly earnings where the employee has been employed for more than 12 months but is taking annual holidays in advance of entitlement, the calculation covers the 12 months prior to the end of the last pay period before the holiday.
When an employer approves annual holidays in advance, the employee should be asked to agree in writing that the employer is able to deduct any final pay to recover from the employee the amount of any overpayment of holiday pay that results from taking annual holidays in advance. If this does not happen, the employer will not be able to lawfully deduct money to compensate for granting leave in advance.