Advice - new employees, holiday pay, contract etc

[sirhc]

Hello, I am taking on 2 new staff each will be working 3 days per week (24 hours each in total). This is a new business, and I cannot afford to pay them any holiday pay, however I don't mind them taking time off as long as they give me notice. I am going to write them an employment contract, and was going to state that there is no holiday pay however they are entitled to time off and im flexible with that. I was just wondering actually if this is lawful? I am assuming as its a contract, and if they sign it and I make them aware of this before starting work that it should be ok? Thanks in advance for any advice. Chris.

[mariefab]

Re: Advice - new employees, holiday pay, contract etc

This is a joke right? In case not, the statutory minimum paid holiday entitlement in the UK is 5.6 weeks even if your employees sign their contracts in blood.

[charitynjw]

Re: Advice - new employees, holiday pay, contract etc

Hi srhc, & welcome to Legal Beagles.

Part-time workers are entitled to paid holidays on a pro-rata basis.

Taking your proposed employees as an example.

The statutory minimum allowance for a full-time employee is 5.6 weeks paid leave per year.

Your employees work 3 days per week each.

Therefore their entitlement would be 3 x 5.6 = 16.8 days.

See attachment

[smileyculture]

Re: Advice - new employees, holiday pay, contract etc

So, if they were only employed for 3 months and laid off, would they still be entitled to holiday pay?

[davec1960]

Re: Advice - new employees, holiday pay, contract etc

They are entitled to holidays from the day they start. In your example they would have accumulated 1/4 of their annual entitlement, 4.2 days. It is part of the cost of running a business, and no different in that respect than rent, rates, utilities, insurances, employers NI etc.

You say that you cannot afford to pay holidays, a viable business will be able to afford holidays.
If your margins are so slim that holiday pay is unaffordable you will fail.
If people taking holidays affects your cashflow, ie when the worker isn't there the business has cash going out but not coming in then I can sympathise having been there myself. The holiday entitlement is accrued during employment, your employee does not have 16.8 paid days holiday due the day they start. This gives you a chance to build up the cash reserve to pay for holidays.

I employ three people 21 hours per week and calculate holidays on an hours basis as I find it easier to administer. Holidays accumulate at 12.07% of hours worked and are taken as numbers of hours rather than days.

One of those employees also works elsewhere part time through an agency and doesn't receive holiday pay as it is incorporated into his hourly rate, presumably increasing his basic by 12.07%, this may be an option for you if "lumpy" cashflow would be a problem, but get proper advice first.

[smileyculture]

Re: Advice - new employees, holiday pay, contract etc

thanks for that, so how can I work out the 5.6 weeks working up to a year?

[mariefab]

Re: Advice - new employees, holiday pay, contract etc

https://www.gov.uk/calculate-your-holiday-entitlement

[smileyculture]

Re: Advice - new employees, holiday pay, contract etc

terrific,thanks