Ace Payroll: Holidays Act Section 16 Calculation of holiday pay where worker has become entitled to annual holiday




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Guide to Holidays Act 1981

Note: This is the text of the old Act that remains in force until 31st March 2004. From 1st April 2004 leave is governed by the Holidays Act 2003

Section 16 Calculation of holiday pay where worker has become entitled to annual holiday

In Plain English

This section explains the holiday pay calculation method for an employee that has been employed for more than a year.
For each week of the annual holiday, the employee shall receive the average weekly earnings in the preceding year - that is, their previous year's gross pay divided by 52.
If the employee is taking their holiday in more than one period, then the above calculation is still used but is applied on a daily basis.
The above calculation shall not in any event result in a rate less than the rate of the employee's ordinary pay at the date when they begin to take that period of their holiday.

Legislation

16.1 Where a worker does not take any part of his annual holiday until he has become entitled to it under section 11 of this Act, his holiday pay in respect of the whole of the holiday shall be calculated in accordance with this section.

16.2 In respect of each week of his annual holiday, the holiday pay of a worker shall be at the rate of his average weekly earnings during the year in respect of which he has become entitled to the holiday.

16.3 Where it is agreed under section 12.3 of this Act that a worker shall take his annual holiday in more than one period, his holiday pay shall be divided so that the amount to be paid to him in respect of each period is in the same proportion to the whole of the holiday pay as the period is to 3 weeks.

16.4 Notwithstanding subsections (2) and (3) of this section, the holiday pay of a worker in respect of any period of his annual holiday shall in any event be at a rate not less than the rate of his ordinary pay at the date when he begins to take that period of his holiday.

16.5 For the purpose of assessing a worker's holiday pay pursuant to this section, the employer may fix a cut-off date other than the anniversary of the commencement of the worker's employment.

Cf. 1944, No. 5, s. 3A; 1974, No. 149, s. 3