Holidays Policy

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Clauses in this Holidays Policy

The excerpt from the guide to this holidays policy template below sets out the main features of our Holidays Policy template, so you have a good idea of what it covers:

Policy outline

This section sets out what the purpose of the holidays policy is and how it applies.

While in the third paragraph of this section, please note that if you have adopted the policy after negotiation with a trade union, it may have become a contractual term of the employees’ contracts. In such a case, modify the template accordingly by deleting this paragraph.

Annual leave entitlement

This section sets out the annual leave an employee is due. In the first paragraph, set out the dates the holiday year (annual leave year) runs from and to, or select that it follows the calendar year – delete which option does not apply.

The second paragraph states that if the employee leaves the company or joins it part-way through a holiday year, they get a proportionate entitlement to annual leave.

The next 2 paragraphs set out:

• the number of days annual leave to which the employees are entitled in each holiday year (fill in the number), and
• that this number is in addition to the statutory bank holidays

So bear that in mind when filling the number in.

The fifth paragraph sets out the current rules on the calculation of the amount of holiday pay due.

The sixth paragraph states that leave that the employee has not taken in the holiday year they generally lose. So it is not normally carried forward to the next holiday year or paid in lieu. Exceptions to this rule are set out in the seventh paragraph, e.g. during a long-term sickness absence or a maternity leave period.

Taking your annual leave entitlement

This section of the holidays policy sets out that an employee needs to apply for leave and have it approved. They should not book expensive holidays before having the annual leave approved by the company.

The fourth paragraph notes that the employee might need to use some leave during an annual shutdown of the company. For example, over the Christmas period if this normally applies.

Short-term sickness during annual leave

Due to case law, periods of holiday that the employee may have booked when they fall ill they can reclaim and treat as sickness absence, instead of holiday leave. While this may be open to abuse, this is the law. Employers therefore need to be vigilant to avoid possible abuse by the employees of this rule. This might include their insisting on the production of a doctor’s certificate confirming the employee is ill. (Legalo has a Sickness Absence Policy template available should you need one.)

Long-term sickness absence and annual leave entitlement

This section of the holidays policy sets out various rules that only apply if an employee is on long-term sick leave. For example, the ability to carry leave forward to the next holiday year or receive pay in lieu.

Family leave entitlement and annual leave

Maternity leave (and other similar leave rights) affect holiday rights. Employees don’t just lose holidays because they are on maternity leave for a long period. The employee can often add their holidays to the end of a maternity leave period to extend it. So note that it will be payable as holiday pay.

Termination and annual leave

As noted above, the holiday entitlement is proportionate in a holiday year when an employee leaves the business. The employee may be required to take any remaining holiday during a notice period or be paid in lieu.

In the final 2 paragraphs of this section of the holidays policy fill in whether variable elements of pay are or are not included in the calculation of holiday pay in lieu, such as:

• commission,
• compulsory overtime,
• travel allowances, and
• performance bonuses.