What you need to know
You must do the following:
- Give employees at least four weeks of paid annual holidays either in full each year on the anniversary of their start date, or building up throughout the year (this doesn’t include public holidays or sick leave).
- Let them take at least two weeks at once if they want to.
- Consider any request to pay out up to one week of their annual holiday entitlement, unless you have a policy stating you won’t do it.
- Keep records of all leave to avoid disputes.
- Give employees at least 14 days’ notice before an annual closedown.
- Give employees at least 14 days' notice if you need them to take annual holidays.
You can also do the following:
- Set limits on how much leave you’ll let employees carry over each year – let them know they might have to take leave if too much builds up.
- Make employees who’ve built up too much leave take some or all of it – if you and your employee can’t agree when they’ll take leave, you have to give them at least 14 days’ notice before requiring them to take leave.
- Let your employees exchange up to a week of annual leave for cash each year – you can’t ask or pressure them to do this.
- Decline your employee’s request for leave if you have a good reason – for example, an especially busy sales period.
- Agree to let employees take paid leave in advance – you should ask them to agree in writing that if they leave the job before they’ve earned back the leave they’ve taken, you can deduct the outstanding amount from their final pay.
Employees who work irregular hours or shifts
If an employee doesn’t have set hours, you can discuss leave together. Four weeks might mean something different depending on the individual employee.
It’s also good practice to continually update the employment agreement, especially for employees who work irregular hours or shifts.
Casual workers with no set hours can agree to be paid an extra 8% of their gross pay instead of accruing any annual leave. This must be written into their employment agreement, and the 8% holiday pay should appear as a separate and identifiable amount on their pay slip.
The same applies to workers on fixed-term contracts of less than a year, as they are not expected to still be working for you on the date they’d otherwise qualify for annual holidays.
Leave during an annual closedown
If you have an annual closedown, your employees have to take time off even if they don't have any annual leave – for example, your office or workshop is closed over Christmas, and no one works.
You have to give 14 days' notice of the closedown.
Employees must either:
- take annual leave over the closedown
- take unpaid leave if they don't have any leave available.
If the closedown period includes any public holidays, you need to pay your staff for them if they fall on days they’d usually work.
Employed for less than a year
If someone has been employed for less than a year, do the following:
- You must give them holiday pay of 8% of their total earnings up to the closedown start date, minus annual leave they’ve taken in advance.
- Change the date they become entitled to annual leave to one year on from the start of the closedown.
- You can agree that the employee can take annual leave in advance to cover days they would otherwise be working during the closedown.
- Allow for paid public holidays if these fall on a day they usually work.
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