How Much Annual Leave Are Employees Entitled To?

One of the most frequent questions we encounter is "How much annual leave are my employees actually entitled to?"

While it sounds like a simple question, the answer can vary significantly depending on whether your staff are full-time, part-time, or work irregular hours.

Getting this right is about more than just checking a box. Proper holiday management is a legal requirement and a cornerstone of a healthy, productive workplace.

The essentials you need to know:

The Statutory Minimum entitlement

Most workers are legally entitled to a minimum of 5.6 weeks of paid holiday per year.

● For Full-Time Workers working a standard 5-day week, this equals 28 days of paid leave per year (5 days x 5.6 weeks).

● Even if an employee works 6 or 7 days a week, the statutory minimum remains capped at 28 days.

This statutory entitlement is set out under the Working Time Regulations and applies to full-time, part-time, and many casual workers.

Part-Time Employees

Part-time workers are entitled to annual leave on a pro-rata basis. This means their entitlement is calculated based on the number of days or hours they work compared to a full-time employee.

● An employee working 3 days per week would receive 16.8 days of leave (3 days × 5.6 weeks)

Irregular Hours and Zero-Hours Workers

Workers with irregular hours or zero-hours contracts are also entitled to paid holiday. Typically, their leave is calculated based on the hours they work, using the 12.07% accrual method

● For every hour worked, the employee builds up approximately seven minutes of paid holiday (Total hours x 12.07%).

● Rolled-Up Holiday Pay: Under rules introduced in 2024, employers can now "roll up" holiday pay for these specific workers by adding a 12.07% supplement to their hourly rate, provided it is clearly marked as a separate line on their payslip.

Bank Holidays: Included or Additional?

A common area of confusion is whether bank holidays are included in annual leave.

Employers can choose to:

1) Include bank holidays as part of the 28-day statutory entitlement, or

2) Offer bank holidays in addition to the minimum entitlement

Contrary to popular belief, there is no legal requirement to provide extra leave for bank holidays, but many organisations choose to do so as part of a competitive benefits package.

Carrying Over Leave

Generally, employees should take their annual leave within the leave year. However, there are circumstances where leave can be carried over:

● If an employee is unable to take leave due to illness

● If statutory leave is not taken due to maternity or other family-related leave

● By agreement between employer and employee

Recent changes and case law have also clarified that employees may carry over leave if they were not given a reasonable opportunity to take it.

Holiday Pay

Employees are entitled to be paid during their annual leave. Holiday pay should reflect what the employee would normally earn, including:

➔ Regular wages or salary

➔ Overtime (if regularly worked)

➔ Commission or bonuses (in some cases)

In short, your employee should not be financially worse off by being on holiday!

Enhancing Leave Entitlements

An employer may choose to offer more than the statutory minimum. Enhanced leave policies can help:

★ Attract and retain talent

★ Improve employee wellbeing

★ Boost engagement and productivity

Examples include additional annual leave days, birthday leave, or additional leave for long-serving employees.

Buying Additional Annual Leave

Many organisations offer employees the option to buy additional annual leave, also known as a holiday purchase scheme. This allows employees to take extra time off beyond their standard entitlement, usually in exchange for a salary reduction.

Key considerations for employers include:

● Structure of the scheme: Employees typically purchase a set number of additional days (e.g. up to 5 or 10 days per year)

● Salary sacrifice: The cost of additional leave is usually spread across the year through payroll deductions

● Eligibility rules: Employers may set criteria around when leave can be purchased or limit participation during probation periods

● Operational impact: Approval processes should ensure business needs are still met

From an employee perspective, buying leave can support better work-life balance, childcare needs, or extended travel plans.

New Compliance Duty (Effective 6 April 2026)

From 6 April 2026, all UK employers will face a new legal duty to maintain "adequate" records showing they have complied with holiday rules. These records must be kept for six years to prove that every eligible worker has received their full entitlement. Failure to comply could lead to enforcement action by the newly launched Fair Work Agency.

HR Best Practices for Your Business

To stay compliant and keep your team motivated, we recommend:

● Implementing a Clear Policy: Outline how leave is booked, when it can be refused, and whether bank holidays are included.

● Encouraging Leave Usage: Discourage "use-it-or-lose-it" panic by tracking leave balances throughout the year and prompting staff to take breaks.

● Managing Carry-Over: Statutory rules generally allow carrying over the 1.6 weeks "additional" leave if agreed, while the basic 4 weeks are typically "use it or lose it" unless sickness or maternity prevents taking it.

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Are you unsure if your current contracts are up to date with the latest 2026 record-keeping requirements? Contact us for a full audit of your holiday policies.

Get in touch: https://www.lilachr.co.uk/contact