Annual leave increase to 4 weeks:

When does the leave increase? Employees currently become entitled to 3 weeks paid annual leave after 12 months continuous service which they can take over the course of the next 12 months (if untaken the days carry forward until they are taken). This entitlement will increase to 4 weeks paid annual leave, when the employee next becomes entitled to annual leave after 1st April 2007.

Example: John commenced employment with you on 1st June 2005, he became entitled to 3weeks paid annual leave entitlement on 1st June 2006 He will become entitled to 4 weeks paid annual leave on 1st June 2007.

What will we need to do? During the course of the year the employee accrues “holiday pay” currently at the rate of 6% of their gross earnings, and this accruing entitlement crystallizes on their anniversary to become annual leave entitlement. We currently accrue at the rate of 6% which over a period of 12 months equates to 3 weeks leave entitlement. The accrual rate needs to increase to 8% over 12 months to equate to 4 weeks leave entitlement.

When will we need to do this? On 1st April 2007 the payroll needs to be adjusted , so that holiday pay accrues at 8%. The adjustment will alter the current holiday pay balance for each employee, recalculating their current holiday pay entitlement as though they had been accruing at 8% since their last leave anniversary date. Overnight your holiday pay liability will increase by 2%. The new requirements commence on 1st April 2007 and you do not need to adjust your holiday pay accrual rate until then.

What happens when someone leaves my employment before 1st April 2007? The current rules apply.
Example: John (details in earlier example) leaves your employment on 30th March 2007.
His final pay will include:
- payment for any untaken annual leave days that he has accrued on 1st June 2006, paid at the greater of his ordinary weekly pay, or an average of the previous 12 months pay.
- And - “holiday pay” for the period 1st June 2006 until 30th March 2007, calculated at 6 % of his gross earnings (includes his untaken annual leave days calculated above) from 1st June to 30th March

What happens when someone leaves my employment on or after 1st April 2007?
Example: John (details in earlier example) leaves your employment on 2nd April 2007.
His final pay will include:
- payment for any untaken annual leave days that he has accrued on 1st June 2006, paid at the greater of his ordinary weekly pay, or an average over the previous 12 months pay.
- And - “holiday pay” for the period 1st June 2006 until 2nd April 2007, calculated for the whole period at 8 % of his gross earnings (includes his untaken annual leave days calculated above) from 1st June 2006 to 2nd April 2007