Holiday entitlement during notice period

When an employee is dismissed or decides to resign from your business, it usually creates a list of things to consider. You may need to start the recruitment process to hire a replacement, or hold an exit interview.

You’ll also need to consider any remaining holiday entitlement the departing employee might have. One of the most common questions we get around this is, ‘Can employees take holiday during their notice period?’

The answer is yes, employees can book and take annual leave during their notice period, provided they still have holiday allowance for that year remaining.

But what about if they haven’t used up all their holiday before they leave, or if they’ve taken too much?

We’ve put together this useful guide to help you get answers to all the common queries.

Annual leave during notice period

Employees can take some or all of what is left of their annual leave within their notice period if they wish to. Statutory entitlement for the majority of workers is 5.6 weeks, which works out as 28 days for full-time employees.

If your business offers more than the statutory amount for employees, they may be able to take more holidays in their notice period, though this must be outlined in their contract.

Annual leave requests within the notice period should be considered in the same way as other holiday requests. You can choose to refuse them, but this should only be for a valid business reason, such as it being within a peak business period for the company.

Can you make employees use up holiday during their notice period?

Yes, you can insist on the employee taking their holiday entitlement before they leave, and the Working Time Regulations also allow employers to choose the dates for the individual to take off.

However, to do this you must give the employee notice. The amount of notice may be specified in their employment contract, but if not, it should be at least double the amount of annual leave days being taken.

Holiday entitlement calculator: Working out remaining annual leave

It’s fairly easy to work out an employee’s remaining annual leave entitlement. You’ll just need to know:

• Their total holiday entitlement
• How much of the holiday year has passed up to their leave date
• The amount of annual leave the employee has already taken that holiday year

Then use the calculation (Entitlement x Amount of year passed) – Holiday taken to work out their remaining annual leave entitlement. If you need to, round the number up to avoid underpaying the employee.

As an example, let’s take an employee who receives the statutory annual leave entitlement of 5.6 weeks, works 5 days a week and whose leave date is 6 months into the holiday year. They’ve already taken 3 days holiday, which is the equivalent of 0.6 weeks (3/5).

The calculation would be (5.6 x 0.5) – 0.6, which would leave them with 2.2 weeks holiday, or 11 days.

Payment in lieu of holiday

If an employee is unable to take all or some of their annual leave days in their notice period, they can receive the equivalent payment instead as part of their final pay. This is not subject to a minimum period of employment, and is true even for employees who have been dismissed for gross misconduct.

The individual’s written statement of employment should tell you how to work out the amount of holiday pay they’re entitled to. This will vary according to whether the employee receives a salary (paid a fixed amount each pay period) or a wage (paid according to the hours they work).

If the employee has taken too much holiday

If an employee has already taken off more holiday than they’ve accrued before their leave date, you can ask them to repay the equivalent amount owed or deduct it from their final pay. However, you can only do this if it is stated in their employment contract, or if you have prior written consent to do so.

The content of this blog is for general information only. Please don’t rely on it as legal or other professional advice as that is not what we intend. You can find more detail on this in our Terms of Website Use. If you require professional advice, please get in touch.