annual holidays - holidays act 1981

Employers and unions or employees can agree to better annual leave rights than those in the Holidays Act, but not to less. Many employment agreements, for example, give employees an extra week's holiday after they have worked for the same employer for a number of years.

Annual leave rights

The Holidays Act gives all employees rights to paid annual leave, whether they are full-time, part-time, fixed-term, temporary or casual employees, adults or young employees. Employees are not lawfully able to agree to give up these rights.

The Crown is bound by only some parts of the Holidays Act. State sector employees and employers should ask for more information about their rights and obligations.

Employees are entitled to at least three weeks paid leave after they have worked continuously for the same employer for 12 months.

Employers must allow employees at least two weeks of uninterrupted leave within six months of qualifying for annual leave, and the rest of the leave must be allowed within the next six months.

Employers can direct employees when to take their annual leave. If they do so, they must give employees at least seven day's notice of the date on which any part of their annual leave is to be taken, unless the employee agrees to some other arrangement.

Employers must allow employees to take annual leave when it is due. Employees do not have an automatic right to carry their leave over to the next year, although this right can be negotiated. However, if the employer fails to allow the employee to take the leave, the employee does not lose the entitlement.

Holiday pay

For each week of paid leave, employees are paid whichever is the larger amount of:

• their average weekly earnings
• their ordinary weekly pay.

We provide you with an example of how to calculate holiday pay or you can search our FAQ Knowledgebase.

Holiday pay should be paid before the employee's holiday starts.

The Courts have allowed holiday pay to be paid on a "pay as you go" basis in certain limited circumstances.

Experience has shown that "pay as you go" arrangements can cause some difficulty. Employers wishing to adopt this practice should seek qualified advice on where such an arrangement would be acceptable and how it can be provided for in employment agreements.

Christmas and seasonal shutdowns

If an employer shuts down for Christmas or the end of a season, employees who started their employment less than a year before should be paid holiday pay of 6% of their gross earnings. Their next employment year will begin from the shutdown date.

Holiday pay at the end of employment

All holiday pay due to an employee (i.e. total entitlement less any holiday pay already received) should be paid to the employee at the time the employee leaves the job.

Employees who work for less than three weeks are entitled to holiday pay of 6% of their total ordinary pay.

Employees who work for more than three weeks but less than 12 months are entitled to 6% of their total gross earnings as holiday pay.

Employees who work for more than a year are entitled to:

• holiday pay for the completed year; plus
• 6% of total gross earnings for the remaining part year.

Holiday records

Employers must keep records of annual holidays for six years. The following information must be kept:

• the employee's name
• the date on which the person's employment started
• the date the person's employment ended
• the date on which the employee becomes entitled to each annual holiday
• the dates on which the employee takes the holidays
• the amount of money paid for each holiday
• the amount of money paid to the employee for annual holidays when the employment ends.

These records can be incorporated in the wages and time records which employers must also keep. Employees and their representatives and Labour Inspectors have the right to see these records.

Enforcement of holiday and leave rights

For further information about enforcing any rights for leave under the law or under an employment agreement you can search our FAQ Knowledgebase.

Statutory rights to annual leave, public holidays and special leave can be enforced by Labour Inspectors. They may investigate complaints and act to recover any money owing to employees.