Call us on:  0808 172 93 22

Holiday Pay Seminar: 5 February – FAQs

Holiday Pay Seminar – FAQs

Holiday Planning

Q: I pay a car allowance of £500 a month on top of a salary of £2,000 a month to my employees.  Do I have to take the car allowance into account when calculating holiday pay? 

A: You would carry on paying the car allowance while the employee is on holiday as this is a normal contractual benefit. However, you would not take it into account twice when calculating the holiday; you would continue to pay £2,500 per month as you are already paying the allowance.

Q: We have an employee who is off on long term sick leave and living in Poland.  How can we manage this absence? 

A: You should try to keep in contact with the employee as much as possible. You should ask them for a fit note/medical certificate from a Polish medical professional and if necessary get it translated. These should be kept up to date. If they are unable to travel back to the UK for absence reviews, you should consider conducting these over the telephone or in writing. Please be aware that a fit note from a doctor outside the UK is evidence of the employee’s ill health. HMRC may arrange translations into English where you disagree with your employee on their SSP entitlement.

If unsure, you should take advice.

Q: We ask employees to reserve 3 days of their annual leave for the Christmas shutdown.  One employee put in a fit note the day before their annual leave, covering them for this period.  Do they have the right to take this annual leave at another time?

A: They may do. It depends upon your policies, how much holiday they are entitled to and when the holiday year starts and ends.  If they are only entitled to statutory holiday pay (28 days including bank holidays) then they are more likely to be entitled to take it at another time. If:

  1. they are entitled to contractual holiday (for example they are entitled to 31 days per year); and
  2. these 3 days are the last of the holiday year, which ends at the end of December and as such fall outside the statutory entitlement; then, depending upon your policies, there may be an argument that they are not entitled to take this holiday at another time.

Q: Is the law in force now in relation to taking into account overtime when calculating holiday pay?

A: Yes, it is in force. The case law is an interpretation of European legislation and UK regulations which were already in force.

Q: You said that there should be regulations coming into force in July 2015 in relation to limiting the amount of time employees can go back to claim unlawful deductions from wages (a backstop period).  Will this be retrospective and therefore get rid of any historical liability?

A: The new backstop period will apply to claims presented on or after 1 July 2015. The current law will apply to claims brought before this date.

Q: I am confused about what types of overtime should be taken into account when calculating holiday pay.  Can you help?

A: Please see the table below which sets out guidance for which types of overtime should be taken into account in the holiday pay calculation.

Type of Overtime Description Include?
Compulsory/ Guaranteed • Must be worked
• Regularly required
YES
5.6 weeks
Non-guaranteed • Regularly required
• Cannot be unreasonably refused
YES
4 weeks
Voluntary • Regularly worked YES – ?
Review all circumstances
Voluntary • Occasional
• Irregular
NO
Updated: by FG Solicitors
Call us on:  0808 172 93 22

HOLIDAY PAY SEMINAR: 5 FEBRUARY – FAQS

Holiday Pay Seminar – FAQs

Holiday Planning

Q: I pay a car allowance of £500 a month on top of a salary of £2,000 a month to my employees.  Do I have to take the car allowance into account when calculating holiday pay? 

A: You would carry on paying the car allowance while the employee is on holiday as this is a normal contractual benefit. However, you would not take it into account twice when calculating the holiday; you would continue to pay £2,500 per month as you are already paying the allowance.

Q: We have an employee who is off on long term sick leave and living in Poland.  How can we manage this absence? 

A: You should try to keep in contact with the employee as much as possible. You should ask them for a fit note/medical certificate from a Polish medical professional and if necessary get it translated. These should be kept up to date. If they are unable to travel back to the UK for absence reviews, you should consider conducting these over the telephone or in writing. Please be aware that a fit note from a doctor outside the UK is evidence of the employee’s ill health. HMRC may arrange translations into English where you disagree with your employee on their SSP entitlement.

If unsure, you should take advice.

Q: We ask employees to reserve 3 days of their annual leave for the Christmas shutdown.  One employee put in a fit note the day before their annual leave, covering them for this period.  Do they have the right to take this annual leave at another time?

A: They may do. It depends upon your policies, how much holiday they are entitled to and when the holiday year starts and ends.  If they are only entitled to statutory holiday pay (28 days including bank holidays) then they are more likely to be entitled to take it at another time. If:

  1. they are entitled to contractual holiday (for example they are entitled to 31 days per year); and
  2. these 3 days are the last of the holiday year, which ends at the end of December and as such fall outside the statutory entitlement; then, depending upon your policies, there may be an argument that they are not entitled to take this holiday at another time.

Q: Is the law in force now in relation to taking into account overtime when calculating holiday pay?

A: Yes, it is in force. The case law is an interpretation of European legislation and UK regulations which were already in force.

Q: You said that there should be regulations coming into force in July 2015 in relation to limiting the amount of time employees can go back to claim unlawful deductions from wages (a backstop period).  Will this be retrospective and therefore get rid of any historical liability?

A: The new backstop period will apply to claims presented on or after 1 July 2015. The current law will apply to claims brought before this date.

Q: I am confused about what types of overtime should be taken into account when calculating holiday pay.  Can you help?

A: Please see the table below which sets out guidance for which types of overtime should be taken into account in the holiday pay calculation.

Type of Overtime Description Include?
Compulsory/ Guaranteed • Must be worked
• Regularly required
YES
5.6 weeks
Non-guaranteed • Regularly required
• Cannot be unreasonably refused
YES
4 weeks
Voluntary • Regularly worked YES – ?
Review all circumstances
Voluntary • Occasional
• Irregular
NO