Annual leave, also referred to as holiday leave, is paid time off work for eligible workers. Statutory annual leave grants workers a legal entitlement of 5.6 weeks of paid holiday, which equates to 28 days for a 5-day week.
Time off work is important for both employees and employers. Without it, employees risk stress and burnout, which could result in a loss of productivity and high turnover rates for business owners.
Whilst annual leave is key for workforces, it’s just as important for employers to have sufficient measures in place ensuring operationality.
Our guide takes a look at the key considerations and questions surrounding annual leave.
How to calculate annual leave for employees
To calculate annual leave for staff, employers must multiply their staff’s working days per week by the statutory minimum of 5.6—this gives full time workers 28 days.
Part timers will receive a pro-rota amount of annual leave. For example, if a staff member works 3 days a week, this will be multiplied by 5.6, giving them 16.8 days.
Employers with staff working irregular hours may apply the 12.07% method. To ascertain accrued paid holiday, they’ll find their hours worked in a certain period and times it by 12.07%.
Simplify the process with an annual leave calculator
The aforementioned equations may seem complex, but an annual leave calculator can remove the guesswork and provide accuracy.
If you’d like an efficient way to calculate annual leave, as well as expert guidance on how to legally decline holiday requests, download our free annual leave template here.
Do you get paid for annual leave?
In the United Kingdom, all eligible workers are entitled to 5.6 weeks of paid annual leave. Employees will be paid their usual rate whilst on holiday, including their base salary, overtime, commission, and any relevant bonuses.
Holiday is accrued (built up) from the moment an individual begins their first day of employment. This includes probationary periods and sick leave.
Are bank holidays included in annual leave?
Whether bank holidays are included is dependant on a company’s annual leave policy. Generally, employers will operate in the following two ways:
- Inclusive of bank holidays: Annual leave allowance will include the bank holidays. Should a business close, then employees must take these days as paid leave.
- Plus bank holidays: Employers may have bank holidays in addition to flexible annual leave days.
It is at the employer’s discretion if they wish to give their staff time off on a bank holiday—there is not a legal right for employees to have it off.
Furthermore, unless outlined in an employment contract, there is no legal requirement for workers to receive ‘double pay’ or ‘time-and-a-half’.
Should staff be required to work bank holidays, employers must still accommodate for workers’ statutory 28 days.
When does annual leave reset?
Again, when annual leave resets is at the employer’s discretion. Whilst there’s no standard date, there are common dates, such as:
- Calendar year: Annual leave resets on the 1st of January.
- Financial year: Typically seen in the public sector; annual leave resets on April 1st.
- Employment anniversary: If a date isn’t outlined in a contract, annual leave will reset on the year employment started.
Can annual leave be carried over?
Many companies’ annual leave policy adopts a ‘use it or lose it’ approach. However, where certain circumstances are met, some employers may have to allow for paid holiday to be carried over.
Here are some examples:
- A relevant agreement: This could be a workforce agreement, a collective agreement, or a legal agreement.
- Claiming back annual leave if sick: If an employee is on long term sick leave, they’re entitled to carry over 4 weeks of paid holiday—but it must be used within 18 months starting from the end of the leave year in which it was built up.
- Statutory leave: Workers may not be able to use their paid holiday due to statutory leave like maternity leave. In such cases, employees must be allowed to move their entitled holidays into the next year.
- An employer blocks a worker using their holidays: Employers must ensure workers use the annual leave they’re entitled to. Workers can carry annual leave over if employers stop them using all annual leave, or neglect to notify a worker they’ll lose unused holidays.
Buying annual leave: How does it work?
Buying annual leave enables employees to buy additional paid time off beyond their statutory annual leave. Employers are not legally obliged to offer this initiative. Should they choose to do so, here are the key elements:
- Salary sacrifice: Employees agree to a reduction in pay for extra leave days.
- Deductions: The cost is distributed across pay checks.
- Calculation: A worker’s annual salary is divided by working days.
FAQs: What does annual leave mean?
How much annual leave per year?
Eligible workers are entitled to 5.6 weeks of paid holiday per year—this is 28 days for a 5-day week.
Do employers have to give bank holidays off?
Business owners are not legally required to give time off on bank holidays. It is at their discretion if they wish to include them or add them.
How do employers calculate annual leave for part-time staff?
This is done on a pro-rate basis. Multiply the number of days worked a week by 5.6. To illustrate, if an employee works 3 days a week, times this by 5.6, which entitles the employee to 16.8 days.
Can employers refuse a holiday request?
Employers can decline a holiday request so long as they have a justifiable business reason along with notice that’s equal to the annual leave requested.
Can employers require staff to take leave on specific days?
Employers have the right to do this. For example, during the Christmas holidays when the business isn’t operational.
Is a ‘use it or lose it’ annual leave policy acceptable?
Yes, but employers must encourage employees to take their annual leave. If they don’t, employees have the right to carry paid holiday into the next year.
Final say: What does annual leave mean?
As discussed, annual leave meaning depends on employer or employee—but the importance is all the same.
Workers rely on their statutory leave to take holidays, rest and recuperate, which is vital to avoiding stress and mental fatigue.
Similarly, annual leave is key for employers, because a workforce that isn’t properly rested is ineffective, and possibly unhappy.
However, when approving annual leave, employers must find a balance that protects their staff and business, and this can be challenging.
Get further support with your annual leave from Peninsula
Are you a business owner struggling to maintain morale and keep productivity high when it comes to approving annual leave?
Peninsula has over 40 years’ experience, partnering with us to help with your HR needs relieves you of many burdens.
You’ll get 24/7 HR advice, unlimited documentation support, and access to innovative HR software.
Proving our professionalism and commitment to clients, we have over 2,100 reviews and a Google rating of 4.8.
Learn how we can support your business. Request a call back today.
