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Ask the Expert: What happens about holiday for staff on temporarily reduced working hours?

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13th Aug 2012
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The question   If your employees agree to do a four-day instead of the normal five-day week for a temporary period of four months, what happens in regard to their annual leave and bank holiday entitlement?   Normally if someone works for four days, they would receive 4/5ths of the usual entitlement but as, in this case, the situation is temporary, does their annual leave stay the same as it was in their initial contract? Also are personnel entitled to be paid for bank holidays during this time?   I have been told by a friend that if the situation is temporary, their original contract, which says that they are entitled to 28 days of annual leave including bank holidays, would remain the same and changes would not have to be made in the same way as if the situation were permanent. Is this correct?    The legal verdict   Esther Smith, partner at Thomas Eggar   The simple answer is that it would usually be a matter to be negotiated between the business and its employees when agreeing a temporary reduction in the working week.   When confirming the arrangements to staff, which I am presuming includes consent that a reduced working week would lead to a subsequent pro rata reduction in salary, a position on benefits, including holiday, should likewise have been settled. But this situation does not appear to have taken place. Therefore, on the basis that their contracts state that they are entitled to 28 days’ holiday plus statutory holidays, and an apparent failure to discuss any variation to this arrangement whether temporary or otherwise, I think there is a good argument that the employees’ entitlement to holiday remains as in their original contract. Esther Smith is a partner in Thomas Eggar's Employment Law Unit.     Martin Brewer, partner at Mills & Reeve   Essentially the outcome depends on what the contract says. If the contract allows simply for '28 days holiday', that remains the entitlement unless and until you vary that clause.   But I have some difficulty with the wording "28 days of annual leave, including bank holidays". It is rather ambiguous. Does it mean 28 days holiday and you get bank holidays as well, or that the 28 days is inclusive of bank holidays?   Assuming it is the former, that is 28 days plus bank holidays, your question is, I assume, what happens if a bank holiday falls on a day that the person does not work?   Again, to answer this question requires an understanding of what the contract means. Translating the contractual language into something that we can all understand, it seems to me that the words "28 days annual leave, including bank holidays" means "you can have 28 days paid annual leave and you will be paid for bank holidays".   However, I think you could probably infer that you would only be paid for bank holidays if you would normally have been at work on that day. Martin Brewer is a partner at law firm, Mills & Reeve LLP.

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