Ensuring the correct process is followed when an employee leaves and holiday payments are made correctly is the responsibility of the employer…
Employees, part-time, full-time and workers with no fixed hours, all accrue holiday and have a statutory holiday entitlement. When an employee leaves, whether they have been dismissed or have handed in their notice they must be paid the amount of holiday they have accrued but haven’t taken.
Taking leave before end of employment
If it is agreed between the employer and employee, the leaver may be able to take whatever is left of their statutory annual leave during their notice period.
Overtaken holiday pay
If a worker has taken more holiday pay than they are entitled to at the point of leaving an employer can recover this if it is in a written agreement (the employment contract or company handbook). However, if it hasn’t been agreed in writing beforehand an employer cannot lawfully make a deduction for the over payment.
Payment in ‘lieu’
If an employee has undertaken their statutory leave, on leaving an employer must pay the undertaken amount. Even if a worker has been dismissed an employer must still pay for undertaken holiday pay. If company policy offers more than the statutory amount of 5.6 weeks annual leave, then separate arrangements can be agreed in an employment contract or company handbook for the extra leave.
Workers with irregular shifts must be paid the outstanding total of holidays they have accrued. See our blog for how to calculate holiday pay for casual workers.