Christmas holiday pay

The festive season often raises questions for employers regarding holiday pay entitlements. Under the Working Time Regulations 1998, employees in the UK are entitled to a minimum of 5.6 weeks of paid holiday per year. This statutory entitlement may include bank holidays, such as Christmas, depending on the terms set out in the employment contract.

Employment Law Christmas Round Up

During the festive season at work spirits are heightened, Christmas jumpers are out in full force and tubs of celebrations and quality street litter the counterspace. While it is a joyous and fun occasion for those who celebrate, there are still a number of things employers should be wary of to ensure a smooth sailing festive season.

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Are employees entitled to enhanced pay for working on Christmas Day?

There is no statutory requirement for enhanced pay if employees are required to work on Christmas Day, meaning any additional pay or holiday premium is at the employer’s discretion. Enhanced holiday pay for Christmas work is common in many industries to acknowledge the holiday, but it is not mandatory unless specified in an employee’s contract or within the company policy.

Employers are therefore advised to review contract terms carefully. If Christmas Day is considered part of statutory holiday entitlement, this should be clearly articulated to avoid misunderstandings.

What is the policy for requiring employees to work on Christmas Day?

If an employer requires staff to work on Christmas Day, it is important to communicate this expectation clearly and in advance. Whether an employee has to work on Christmas Day may depend on the industry they work in and for many industries (such as travel and hospitality) it is a commercial or operational necessity.

As per the Working Time Regulations, employers must give notice that is at least twice the length of the holiday period being requested to work. For example, if the employer needs an employee to work on Christmas Day instead of taking leave, at least two calendar days’ notice would be required.

There are no explicit requirements about the form this notice must take and it does not need to be in writing. However, best practice often involves setting these expectations months in advance.

How does holiday pay affect part-time or seasonal workers who work overtime?

Part-time and seasonal workers with fluctuating overtime hours are entitled to holiday pay that reflects their average earnings, just as full-time employees are. If these workers have consistently and regularly worked overtime, this must be included in their holiday pay calculation using the same 52-week average.

For seasonal workers who do not work year-round, employers must calculate the holiday pay based on the actual weeks they worked. If the employee has fewer than 52 working weeks, the employer should look back only over the available weeks, ensuring that any holiday pay fairly reflects the seasonal overtime they worked. 

To manage expectations, employers should clearly explain to part-time and seasonal workers how their holiday pay is calculated, especially when it includes irregular or seasonal overtime. 

How should holiday pay be calculated for employees with fluctuating overtime?

For employees with variable pay, including fluctuating overtime, holiday pay must reflect an average of their earnings over the previous 52 weeks, as stipulated by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018. This 52-week reference period helps smooth out irregularities and provides a fairer estimate of average earnings. This rule applies regardless of when the worker’s leave year starts. 

Employers should update this calculation regularly to capture any changes in the employee’s work patterns, particularly before holiday-heavy periods like Christmas, when demand for overtime might fluctuate or when seasonal/temporary workers join the business. 

By carefully reviewing holiday pay calculations and employment contracts, employers can ensure fair and transparent practices that support employee morale and compliance with holiday pay regulations. If you require any further assistance, then do not hesitate to contact a member of our team today.