Are Zero-Hours Workers entitled to Paid Annual Leave?

The simple answer is ‘yes’. Employees engaged on zero-hours contracts have the same legal protections as more traditional full-time employees and are entitled to paid annual leave during employment.

Zero-hours workers are also entitled to paid leave upon termination of employment, should there be any accrued leave that hasn’t been taken. Zero-hours workers continue to accrue annual leave in the same way as other employees. The only exception to this is in cases where there is a break in employment. For example, if an employee on a zero-hours contract works January-April, but then has no work for June and July and then works again from August

However, the calculation for what the entitlement is for zero-hours workers and what the compensation is for leave when taken, can be quite complex.

Employees on zero-hours contracts accrue annual leave from the first day of their employment, like any other employee. Although the entitlement accrues in the same way as full-time employees – being monthly at 1/12 of the annual entitlement, using an hourly accrual system to calculate holiday allocation and pay is the fairest and best way to calculate annual leave and pay.

A zero-hours employee is entitled to a pro-rata amount of 5.6 weeks holiday. This figure equates to 12.07% of hours worked over a year. The calculation for this is as follows:

5.6 (weeks of paid leave) x 100 ÷ 46.4 (remaining weeks in the year) = 12.07. Therefore, holiday is accrued at a rate of 12.07% per hour.

For example, an employee on a zero-hours contract who works 10 hours in a week, would get 72.6 minutes of holiday pay. The calculation for this is as follows:

12.07(%) ÷ 100 x 10 = 1.21hrs – which is equal to 72.6 minutes. That means your zero-hours worker is entitled to 1hr 12 minutes of annual leave.

In week 2, if the zero-hours worker worked 30hrs, they would accrue 3.6hrs for that week – being 4.8hrs to date).

If the zero-hours worker wishes to take paid annual leave, the way to calculate the payment due would be to add up the number of hours worked in the preceding 12 weeks and apply the same calculation. It is important to note however, that any weeks in which there was no work done should be ignored and replaced by the next week in which work was done – even if this was longer than 12 weeks ago.

For example, if there were 295hrs worked at the time leave was requested, the zero-hours worker would have accrued 36hrs. They could therefore have a week off and be paid for 36hrs at their standard rate. When they returned to work, the calculations would resume.

The government website provides a really useful tool for helping employers to calculate annual leave https://www.gov.uk/holiday-entitlement-rights

For more information or to book an HR consultation please contact Karen Scott on 07762 629 448 or get in touch by clicking here.