Holiday Pay

There are a number of issues to consider in answering this question - what the Working Time Regulations say about paying holidays, what the "protection of wages" legislation allows employers to deduct from wages, and what your contract of employment says that your employer may do when you leave the employment.

Before reading this article further, you should first consider in full the FAQ Can my employer deduct money from my wages?

What do the Working Time Regulations 1998 say?
The Working Time Regulations allow all "workers" to take 5.6 weeks' paid holiday each year in holiday years starting April 2009 or later. These statutory provisions apply to "workers", defined as employees and anyone else who works under a contract, other than a person who is self-employed. The rules also, therefore, apply to agency staff, trainees, apprentices, fixed-term workers and contract workers. As a result, this article will refer to "workers" rather than just "employees".

For further information about who are "employees" and who are "workers", see the FAQ I am self-employed. Am I entitled to holiday pay or any other benefits from my client?

When a worker's employment comes to an end, the employer must pay any outstanding or "undertaken" holiday entitlement. This means that, if you have not taken all of your paid holiday entitlement in the current holiday year, you must be paid the value of the undertaken holiday, calculated using your normal rate of pay, with your final wages.

Example: You are entitled to 28 days paid holiday in a full holiday year. You leave 9 months through your holiday year, so your entitlement to that point is 21 days. You have only taken 13 of those 21 days. Your employer includes 8 days' holiday pay in your final wages.

However, the Working Time Regulations do not authorise the deduction of "overtaken" holiday entitlement. In other words, you have taken and been paid for more holiday than you are entitled to up to the time you leave your job.

Example: You are entitled to 28 days paid holiday in a full holiday year. You leave 6 months through your holiday year, so your entitlement to that point is 14 days. However, you have actually taken and been paid for 17 days. Your employer deducts 3 days' holiday pay from your final wages.

Your employer has no statutory right to deduct the value of the overtaken holiday. Therefore, this is an unlawful deduction from wages unless there is a specific provision in your terms and conditions of employment for the deduction to be made in these circumstances.



More FAQs Related to Holiday Pay
The Construction Industry contractor I work for deducts tax from my invoiced payments. Is the contractor required to pay me holiday pay?

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