What holiday pay entitlement does an employee have during maternity or adoption leave?

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Paid maternity and adoption leave (referred to as "family leave" in this article) is not a replacement for paid holiday leave. They are separate entitlements and employers must treat them as such. Holiday pay may not be paid to an employee who is absent on family leave.

Paid holiday leave is a statutory entitlement. It is in two parts:

1. 4 weeks' annual paid leave, and
2. 1.6 weeks' additional paid leave.

Entitlement to additional paid leave is being introduced in two stages:

1. 0.8 weeks from 1 October 2007, and
2. a further 0.8 weeks from 1 October 2008.

However, how much of each additional 0.8 weeks applies in any particular holiday year depends on when the holiday year starts, as shown in the following chart:

• During ordinary family leave, i.e. the first six months' leave, the full employment contract continues in existence, including contractual holiday provisions but excluding the employer's obligation to pay remuneration.
  
  
• During additional family leave, i.e. the second six months' leave, the employment contract also continues in existence, although only a limited set of obligations between the parties apply. These obligations to not include contractual holiday provisions unless the contract specifically indicates that they continue in force during additional leave.

Therefore, as the full period of family leave is governed by the contract of employment, employees and agency workers taking such leave are also entitled to full statutory paid holiday leave, plus any additional contractual provisions that apply during the six months of ordinary leave.

Example: An employee takes statutory maternity leave for a year starting 1 January 2008. The employer's holiday year also starts from 1 January 2008. The statutory entitlement to paid holiday leave during 2008 is 5 weeks, made up of 4 weeks of annual paid leave and 1 week of additional paid leave (see chart above). However, the employee's contract provides for 6 weeks' paid holidays each year. The employee is entitled, therefore, to 3 weeks' contractual holiday in respect of the first six months of leave, plus 2½ weeks' statutory holiday in respect of the second six months of leave. Between 1 January and 31 December 2008, the employee is entitled to 5½ weeks' paid holiday leave.

The example illustrates, at its extreme, the problem that employers face in ensuring that employees take their full statutory holiday entitlement. None of the 4 weeks' annual paid leave may be carried forward to the next holiday year or paid up. The extra ½ week of contractual entitlement could be carried forward to the next holiday year or paid up. The 1 week of additional paid leave may also be carried forward, but not paid up. At the very least, therefore, the employer must provide 4 paid weeks of holiday leave in a year period, for the whole of which the employee is away on maternity leave.

This is an extreme case as the year of family leave is more likely to straddle two holiday years. However, that situation may still create problems. For example, the employee may have a lot of holiday leave left in the first holiday year. The employee will return to work with a full year's entitlement to take in the second holiday year.

An employee cannot take holiday leave at the same time as family leave. So, what options are there to minimise the problem?

• As already mentioned, as much leave as is permitted by law could be paid up or carried forward to the next holiday year.
  
  
• When the employee sets a date for starting family leave, the employee could take all of the remaining holiday leave for that holiday year before starting leave. The only potential problem is that, in the case of maternity leave, the leave would have to start before the employee's planned date if the baby arrived early.
  
  
• At the end of the period of leave, the employee could give 8 weeks' notice to return to work early and then take paid holiday leave before actually returning to work.

It is good practice, when confirming all of the details of the family leave to the employee, to take all of the holiday leave issues into consideration and come to an agreement on how the employee will actually take the full paid holiday leave entitlement.

(The issues discussed in this article do not relate to paternity leave, which is currently of just one or two weeks' duration. However, when six months of additional paternity leave is introduced, likely in April 2009, the same issues will apply although to a lesser degree.)

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