Employees get their annual holiday entitlements on their anniversary of starting work. There are two circumstances where the date on which the employee’s entitlement accrues is adjusted:
- When the business has an annual closedown period and an employee is not yet entitled to annual holidays: This is covered later under “Regular annual closedowns”.
- When an employee takes unpaid leave of more than a week during the year: This is covered under “The effect of unpaid leave on annual holidays”.
An employer and employee may agree on what four weeks’ annual holiday means in their circumstances. Any agreement should ideally be recorded at the start of the employment relationship, even where it is clear what “four weeks” means. Such an agreement will be in relation to the time away from work that “four weeks” represents and does not affect the payment that will be due for those weeks when they are taken. The agreement must be a genuine reflection of the employee’s working week.
Where agreement cannot be reached, either party can seek the assistance of a Labour Inspector.
Where employees are permanently employed on a constant work pattern, establishing their entitlement is easy. On each anniversary of the date of commencing employment, the employee is entitled to four weeks of paid annual holidays.
Where an employee is employed on a work pattern that changes during the year, the employer and the employee should reach a new agreement on what “four weeks” will be in terms of time away from work. Ideally this agreement should be made when the work pattern changes and recorded in writing.
Where an employee is employed on a genuine fixed-term agreement of less than 12 months, the employee may be paid annual holiday pay with their salary. That is, annual holiday pay is separately identified in the employee’s employment agreement and wage and time records and shown as a separate item on any pay-slip (i.e. on a pay-as-you-go basis). This reflects the fact that these employees are not expected to reach the date on which they qualify for annual holidays.
More details of this approach are set out under “Employees with intermittent or
irregular work patterns (genuine casual work)”.
Many types of employees are described as “casual employees”. The range of uses of this term means it is not possible to include a single definition of casual employee in the Act. However, where an employee’s employment pattern is so intermittent or irregular that it is not possible or practicable to attempt to provide four weeks’ paid annual holidays, the employee may be paid annual holiday pay with their regular pay (i.e. on a pay-as-you-go-basis). As noted above, this should be set out in the employment agreement and shown as a separate calculation on any pay slips.
Details of this approach are set out under “Employees with intermittent or
irregular work patterns (genuine casual work)”. Employees paid on a
pay-as-you-go basis do not become entitled to time off for annual holidays.
Where an employee has an irregular or changing work pattern over the entire 12-month period, so there is no pattern to the hours worked and the hours and days of work are entirely irregular the principal of four weeks annual leave and reaching agreement on what will constitute “four weeks” in terms of time away from work, still apply. In such cases where the hours and days of work are irregular and intermittent employers and employees sometimes agree to accrue time towards annual leave on the basis of 4/52 for every hour worked.
Employers who keep records manually should ensure they:
- have an accurate wage and time record
- correctly complete their employees’ holiday and leave records.
They can then accurately calculate the average weekly earnings for the purposes of annual holiday pay by dividing the gross earnings for the year prior to the holiday by 52.