Holidays - CloudCo Accountants

Holidays form an important part of the working year: important for employees because they give them the chance to recharge batteries; important for employers because they can pose logistical headaches, especially for smaller businesses that often miss the presence of key employees.

But with a bit of forward planning, all businesses can make sure that workers get the right amount of time off without jeopardising the functionality of the firm.

Holidays for staff: the rules

Full-time workers are entitled to a statutory minimum of 5.6 weeks’ holiday in a leave year. For someone on a five-day week, that’s 28 days paid holiday annually. Those 28 days can include bank holidays. For part-time workers, holiday is calculated on a pro-rata basis. Of course, an employer can offer more than 28 days.

For statutory purposes, paid holiday is capped at 28 days: even if someone works a six-day week, they are entitled to no more than 28 days of paid leave. Employees are entitled to holiday leave from the first day of their employment.

Paid holiday entitlements need to be included in workers’ contracts of employment.

Unused holiday

Workers have to take a minimum of four weeks’ leave annually. If there is any unused statutory holiday left over, provided both the employer and employee agree, it can be carried into to the next leave year but no further than that.

Holiday pay

For every week of holiday they take, employees must be paid a week’s earnings. This is worked out according to the sort of work they do: fixed hours and pay; variable hours and pay; and shift work, for example. Employees are entitled to their holiday pay at the time they actually take their holiday.

Calculating leave entitlements

For full-time employees, this is quite straightforward: five days a week equals 28 days a year holiday. For part-time workers, it is worked out on a pro-rata basis: if someone works two days a week, then their holiday entitlement is 5.6 x 2 or 11.2 days.

In the case of shift workers, it is simpler to make the calculation based on the number of shifts. If a worker puts in three 10-hour shifts a week, their holiday entitlement is the equivalent to 5.6 x 3 = 16.8 10-hour shifts.

For employees who work annualised hours, the calculation begins with the average number of hours worked over the year. Divide that figure by 46.4 weeks (52 minus 5.6) to arrive at an hour per week number. Multiply that by 5.6 to give the total hours to which they are entitled ass holiday leave.

Maternity, paternity adoption and parental leave

Staff on statutory maternity, paternity, adoption and parental leave can accumulate paid holiday leave.

Those on maternity and adoption leave can accrue holiday entitlements during ordinary and additional leave, although paid holiday leave can’t be taken simultaneously with maternity leave. So if an employee knows that maternity leave is looming, the employer may want to discuss whether the employee would like to take their holiday before the start of the maternity period or at the end.

Employees who are on statutory paternity or parental leave can also accrue holiday entitlements while they are away.

Sickness absence

Workers who are off work sick can still accumulate holiday leave entitlements.

Should a worker fall ill just before embarking on some annual paid leave, or while on holiday itself, the employer is not obliged to turn holiday leave into sick leave. But progressive employers may allow staff who fall genuinely ill the chance to claim their holiday leave back for use at some other time in the leave year.

Public holidays

Employers don’t have to give employees paid time off for public and bank holidays, but their terms and conditions should include whether they have the right to paid leave on public holidays and if their rate of pay for working a public holiday is higher than their normal rate.

Giving notice of leave

Employees must tell employers of their wish to take paid leave in advance of the leave. Usually, employers set out that period of notice in the employment contract. If there is nothing in writing, then employees must allow a notice period that is a minimum of twice the length of the period of leave they are asking for. So a week’s lave would require at least a fortnight’s notice.

Limiting leave

Employers can impose certain conditions on when holiday leave is taken. Those conditions could be detailed in the employment contract or they could be a matter of tradition.

More often than not, limitations on leave involve certain periods when leave cannot be taken, or placing a ceiling on the amount of leave that can be taken in one go.

An employer who has particularly busy periods, for example, may wish to build restrictions into the contract of employment over just how many staff can take holiday leave and for how long during those periods.

Managing holiday leave

Holidays are precious times for employees, and good employers will be keen to make sure that their staff enjoy time off work. They are more likely to return to work rested, refreshed and motivated.

From an employer’s point of view, of course, holidays can present a problem as well as a benefit. If too many key staff want to take time off during the same period, a business may need to take on extra cover, which is an expense. And there is no guarantee that agency or temporary staff will have the same inside knowledge of the business.

It makes sense, therefore, that staff understand the rules about taking leave: that too many people cannot book the same period; that certain busy trading times demand that as few people as possible are away; and that departments cannot be left understaffed.


The key to successful holiday management is planning. A computerised holiday booking system – one that maps leave records past and future, and links to the payroll – is essential. That way owners and managers can keep track not only of who has taken what leave but also of areas of the year that look in danger of being overbooked. Making the leave calendar or diary available to staff also helps: employees can see when other staff have already booked holidays and can plan their own leave accordingly.

Notice periods are important too. Employers may want to insist on a month’s notice for leave periods of more than a week, for example. This helps to prevent sudden rushes of holiday requests and provides the chance to arrange cover or to redeploy staff.

Some sections of the year are bound to be more popular than others, so it is probably sensible and fair to impose a ‘first come, first serve’ rule: employees will understand that booking their holidays well in advance means that their requests will take precedence over those who book later.


The wider the spread of leave bookings, the easier is leave to manage. Employers may, then, want to encourage staff to extend their leave evenly across the year. This promotes regular, recuperative breaks, which are good for morale and productivity, and makes the handling of time off simpler.


Monitoring the leave that remains to each employee gives employers a precise idea of whether there is likely to be a sudden influx of leave requests. Employers who like to see all their staff take their full statutory time off each year, rather than carry chunks into the next leave year, can also use such monitoring to remind workers of the leave left to them and to encourage them to book a break in good time.


If there are restrictions on when holidays can be taken, make sure everyone is aware of this throughout the year, particularly when those restrictive periods are approaching.


Even where clear rules are in place, however, a little flexibility in dealing with last-minute requests can be good for staff morale and loyalty. So long as that flexibility doesn’t discriminate against another employee, or imperil the effective running of the business, employers should accommodate a holiday request where they reasonably can, treating each one on an individual basis.

CloudCo Accountancy Group

CloudCo Group is a Chartered Management Accountancy Firm offering premium accounting services to a range of businesses and individuals from their office in Milton Keynes.

Recent Guides
Follow Us