Friday, March 16, 2007

Employees Holiday Rights and Holiday Pay

Recent Court of Appeal decisions affect an employee's rights to holidays and the way in which holiday pay can be made. I summarise the position below.
Every employee is entitled to a minimum of 3 weeks paid leave per year no matter whether the employee is part time or full time;

The right to take leave arises only when an employee has worked for the same employer for a period of one full year (unless varied by contract);

Holiday pay accures and any holiday not taken during the term of employment must be paid out in cash at the end of the employment (unless varied by the employment contract);

If an employee leaves the employment before the end of a full year's work a payment of holiday pay at the rate of 6% of total earnings must be paid at termination and cannot be set off against moneys owed by the employee without that employee's prior written consent;

For temporary and casual employees it is legal for employers to make an arrangement on the basis that the holiday pay is paid on a "pay as you go" basis rather than in a lump sum at the end of the employment. (This reverses a decision of the Employment Court which suggested that this practise was illegal);

Permanent and long term employees must still receive their holiday entitlements as actual paid holidays and not as regular payments at other times during the year;

Statutory holidays the amount to be paid for a statutory holiday which is taken on a day that would otherwise be a working day for that employee must be the same as the ordinary pay for an ordinary working day;

Rates of payment for holidays overtime bonuses and allowances such as productivity or incentive payments which are based on actual working results are not to be included as part of holiday pay;

Employment contracts may include a composite flat rate of pay that includes ordinary time rates, overtime rates and bonuses, and that then becomes the rate for calculating holiday pay.

Each employment contract must be looked at in order to determine how to treat the amount payable under it;

Other special rates and statutory holiday pay the Holidays Act does not allow the parties to contract for a lesser rate for the purposes of holiday pay.

Unless there is a contractual agreement to that effect an employee cannot be required to work on a statutory holiday.

The contractual provision to be enforceable must also provide for an alternative day off. If the alternative day off is not so specified then the employee can choose which day to take.

Holiday rights and the way holidays are to be paid can be a contentious and confusing issue. I would be happy to advise in any particular case.