Holiday pay entitlement is included in the Working Time Directive as implemented by The Working Time Regulations 1998 and The Working Time (Amendment) Regulations 2007
Employers should make it clear how they expect holiday entitlement
to be dealt with by clear contractual terms
The following situations should be borne in mind,
1) Does the holiday entitlement include/exclude public holidays
2) Exclude the provisions of the Working Time Directive regarding notice periods and replace them with the employer’s own terms on how much notice the employee needs to give of a planned holiday.
3) Where the contractual terms for holiday entitlement are more generous than the statutory minimum, the employer can provide for only accrued statutory entitlement to be paid in lieu, on termination. If the foregoing is required the contract should state the first 28 days of holiday taken in the holiday year (including public holidays) shall be the employees statutory leave entitlement for that holiday year under Reg. 13 & 13A of the Working Time Directive.
4) Employers should make it clear that on termination an employee that has taken more than their annual holiday entitlement should refund the holiday pay received in excess of their entitlement
5) Employers can require an employee to use up all of their accrued, but untaken , holiday entitlement during any notice period (e.g. garden leave)
6) During any arranged periods of business closure during the year, for example Christmas and New Year, the employer can include in the contract a requirement for employees to take some of their holiday during that period
