Can I pay staff for untaken annual leave?

Mudd14

As said, legally you must allow the minimum statutory amount of time of work paid under the Working Time Regulations 1998.

However, as I have found most employers bend the rules slightly with all sorts, so what ever you and your employees agree might be diffferent!

Savvy_Sue

grannymay wrote: »

Right, ok, so it's not legal for me to pay for excess holidays. Being a community interest company, I can't pay bonuses or dividends but I can probably get around it by drawing up an agreement for staff to sign, stating that 'as they worked hard helping with the setting up of the company in the first year and didn't take all their leave entitlement, they will be paid for their untaken leave for this year only but must take leave in future'.

Or, if the needs of the business allow for it, you could instruct them to take last year's leave within the next 3 months, see my response to Liney's suggestion below.

grannymay wrote: »

I will also take this opportunity to amend the leave year so the next year runs from 1st April 2011 to 31st January 2012, and then 1st Feb to 31st Jan each year (this is better for me as January is a quiet month and untaken leave can be used then). Does that sound ok?

That sounds fine, and if you can let people take leave within the next 3 months I'd get them to take it rather than pay them for it. And you can have your leave year starting and finishing whenever you like, as long as it's clear.

I would also keep an eye on how much leave staff have taken and have yet to take, and 'encourage' them to book it if they have more than a quarter left by 3/4 of the way through the leave year. If you have busy periods, make sure they know that it will be difficult for you to grant leave requests then. Have a clear policy for booking, granting and recording leave!

Incidentally, in your staff T&C it's worth having a clause to say that leave is pro rata in the first and last years of employment, and that you will recover overpayments if too much has been taken. Then if someone takes all their leave in May, and then resigns in June, you can deduct the leave they have 'over' taken from their June salary. If you haven't put it in their T&C, you can't ...

grannymay wrote: »

Incidentally, if I have a member of staff with a set working pattern of 16 hours, Monday and Tuesdays and another member of staff working 16 hours Wednesday and Thursdays, how many hours annual leave including bank holidays are each entitled to?

getmore4less wrote: »

Asuming these are 2 8hr days(don't forget the legal breaks for over 6hour shifts).

And those breaks can be unpaid, so your 8 hour day could be from 9 am - 5.30 pm with a half hour unpaid lunch break.

getmore4less wrote: »

They are entitled to 2/5 of the full time workers holidays.

And it's worth pointing out that the minimum is based on the assumption of a 5 day week. Which leads me to ask whether the full-timer working 36 hours does days of equal length or does days of different lengths? I ask because 36 doesn't easily divide by 5, and if they are working a 6 day week then it's worth knowing that you use 2/5 for someone working a 2 day week, not 2/6 (which I know = 1/3).

If they are working 5 days of different lengths then it may be worth them booking leave by the hour as well. Otherwise it's easy when they book a full week, but more complicated if they only book 'short' days.

getmore4less wrote: »

So if you want to give statutory minimum of 5.6 weeksa thats 2*5.6 = 11.2 days of 8 hours each.

That calculation can be done without reference to the holiday entitlement of the full-time person, which is worth remembering, and it can also be done in hours: hours pw x 5.6 = holiday entitlement.

getmore4less wrote: »

It is also a good practice for part time employees to accrue holiday for overtime upto a full time equivilent since not soing this could be contrued as detrimental to part timers over full timers.

In which case, you could simply log all hours worked, multiply by 12.07%, and advise staff at regular intervals how much holiday pay they have built up. This is what you do if people never work regular hours.

liney wrote: »

OP the situation you have put yourself in cannot end in a legal resolution.

This is true, but is unlikely to be a problem unless someone complains. And I think there is a recognised grey area, in that employers aren't allowed to pay for untaken leave, and can't legally allow staff to carry leave forward if they haven't taken at least the stat. min. A good employer will take steps to ensure that staff DO book and take leave, but if something like this has happened, what's an employer to do to resolve it? We've read on this board of employers shrugging and saying "not my problem, you should have taken it", that's not a good employer, but I'm not sure what sanctions there are for them.

The OP has realised there's a problem, and is taking steps to sort it, that is good.

liney wrote: »

My suggestion would be that you decline to pay in lieu, insist they are taken within the next 3 months, and calculate your annual leave correctly for your part timers next year.

Remember you can allocate holidays if your staff refuse to book, by giving them notice to take them, ie if you want them to take a week you give them two weeks notice.

That would be my suggestion too: it saves the company money, and unless you're about to hit a hectic period which makes it difficult for leave to be taken in the next 3 months then you could sit down and work out who's taking what when.

Savvy_Sue

Sambucus_Nigra wrote: »

So, make sure you get yourself trained up!

It's all part and parcel of being an employer.

grannymay wrote: »

I am trying!

I started my company thinking it would just be me and 1 other member of staff with a few clients. Less than a year later I've got 7 WTE staff and 27 clients.

I've had to learn fast but some things just take longer to decipher than others!

May I commend to you the information on the Businesslink site relating to employing staff. Also if you can find an email update service which flags up the major changes to employment legislation, you could save a lot of trouble in the future.

grannymay

Savvy Sue,

Thank you so much for your taking the time to explain it all in plain terms and giving helpful suggestions without being critical of my lack of knowledge on this.

Setting up a business is not easy and it's impossible to work a 60 hour week, look after 3 young children and keep the staff and clients happy as well. But it has all been totally worth it. I haven't made any profit and I don't particularly want to - I just make sure the staff and bills are paid on time and we have the equipment we need and I'm happy to plough all profits back into the community. Seeing the delight on these disadvantaged disabled youngsters more than makes up for it.

I have read your link to the business link site and it's extremely informative and I'd thoroughly recommend it. I have come across their site before but was just browsing so I forgot about it.

I'm also pleased to say that the light has gone on and I finally get it! I've even sat and typed up a 'ready reckoner' for annual leave entitlement ranging from working 1/2 hour e
up to 36 hours each week.

I'll be sending all staff amended contracts with the change of annual leave year and I'll include your suggestions regarding overtaking leave, etc.

Thank you again.

duchy

I have in the past being paid for untaken holiday. It was deamed to be "a one time exception due to demands of business" by quite large and high profile companies . I have no idea of the legalities of it (and didn't really care as it meant extra money ) but it certainly happens. I'd say it has happened to me maybe five or six times in total -the most recent just over a year ago.

diable

Employ your staff as contractors/self employed, pay them a bit more and get them to sort their own shizzle out......

Savvy_Sue

diable wrote: »

Employ your staff as contractors/self employed, pay them a bit more and get them to sort their own shizzle out......

Noooooooo! Don't do that unless they are GENUINELY self-employed or contractors. See this from HMRC to help you decide.

BTW, if the work is with disabled youngsters, I'm guessing it would be darned hard to be self-employed: you couldn't just send anyone to do your job if you fancied the day off, whereas if you are genuinely self-employed, you can!