Updated: Nov 24
Managing your employees’ leave can be a serious administrative headache. Keeping track of absences, carrying over allowances and managing approvals requires robust processes.
Understanding the different types of leave and how each impacts your employees’ pay is complex and requires either an in-depth understanding of the topic or simply a good software that takes care of it for you.
This article walks you through the main types of Leave in the UK and why your choice of HR and payroll software can make a world of difference to your management processes.
Leave of absence & payroll
Keeping track of different types of leave and relevant amounts of statutory pay allowances is no easy task. That’s why using a payroll software like Zelt that automatically handles all relevant calculations, monitors holiday entitlement, and the types of leave taken is essential.
Leave and payroll are inherently connected:
When an employee leaves, you’re required to pay out any remaining holiday allowance as accrued holiday pay
When an employee takes statutory leave, you can deduct their statutory pay from your HMRC bill
If employees take unpaid leave, you need to deduct this from their pay.
For this reason, it makes sense to opt for a payroll software which unifies HR and payroll. Zelt seamlessly collects all the relevant information when an employee requests time off through their employee portal, automatically updates your payroll to reflect the type of leave they’ve taken, and ensures that your employees always receive the right amount of pay – which is crucial for the employee experience.
The main leave types in the UK
There are many different types of leave in the UK, some statutory and others that are offered at the employer’s discretion.
Here is a quick overview of the key types of leave that we cover in this article, and which you need to know once you become an employer in the UK. Each of these have a different impact on an employee’s pay which we cover in our statutory pay article.
Statutory annual leave
Leave related to parenthood
Maternity, paternity & adoption leave
Shared parental leave
Unpaid parental leave
Other types of statutory leave
Zelt helps you manage both statutory and non-statutory leave. You can input custom allowances as well as any types of non-statutory leave that you want to offer, so that your employees can accurately track their leave entitlement via their portal.
Statutory leave vs. employer benefit leave
Employers can choose to offer their workers supplementary leave on top of the statutory minimum or offer completely different types of leave that are not legally provided for. However, any unpaid statutory pay amounts to a breach of employees’ rights which can be enforced by an employment tribunal.
One example of statutory leave is an employee’s annual leave allowance - this is a legal entitlement to take time off work and can be enforced by an employment tribunal. Time off for learning and development or duvet days are different. If at any point an employer withholds these additional benefits, this is a matter that must be resolved between employer and employee, as this does not constitute a breach of statutory rights.
Statutory annual leave
In the UK, all employees enjoy a legal entitlement to 5.6 weeks (28 days) of paid holiday per year. Commonly referred to as ‘statutory leave entitlement’ or ‘annual leave’, this is calculated pro rata.
Pro rata means proportional to the number of days worked. So, the more work that someone does, the more holiday they accrue. This is an essential aspect of payroll management and your payroll software should calculate this automatically.
Workers start to build-up their annual leave as soon as they start working for you. They’re also entitled to build up annual leave entitlement during maternity, paternity, and sick leave.
Use this ACAS holiday pay calculator to calculate how much holiday an employee has accrued and how much holiday pay you owe when an employee leaves.
Statutory leave year
It’s your responsibility as the employer to inform your workers of when your statutory leave year runs. If you haven’t set a particular leave year, then it will run from that worker’s first day at work. If someone starts their job mid-way through a leave year, they’ll only be able to take the relevant proportion of their entitlement.
Are bank holidays part of statutory leave?
The decision to include bank holidays as part of statutory leave is discretionary. So it depends on what you as the employer decide to do. You can also elect to offer your employees more holiday than the statutory minimum. If you’re using Zelt, simply input your specific provisions and the software will take care of the rest.
Carrying over leave
You should set out your policy on carrying over leave of absence from work in your employment contract. Workers on the standard statutory entitlement of 28 days are able to carry over a maximum of 8 days.
For any extra entitlement, it’s up to the employer to decide whether they allow them to carry over additional untaken leave.
Additionally, if the reason that someone hasn’t taken their full allowance of leave is because they’re already on a different type of leave from work (such as sick leave), they should be able to carry over a maximum of 20 out of 28 days into the next year.
How to calculate statutory leave for part-time workers
Part-time workers also receive 5.6 weeks of holiday entitlement. However, because they work fewer days in a week, this will total fewer than 28 days of holiday overall.
If a part-time worker works irregular hours, their holiday entitlement will be based on the number of hours worked, and pro-rated compared to what a full-time employee is entitled to. A unified payroll and HR software like Zelt handles these kinds of calculations automatically for each individual employee, so you don’t have to – which helps avoid human error and improve the overall employee experience.
How to calculate holiday pay
Workers receive equivalent to a week’s pay for every week of statutory leave that they take. A week’s pay will look different for different workers and is calculated depending on the kind of hours they work and how they’re paid for those hours.
You can use our accrued holiday pay calculator to determine how much holiday pay you owe an employee that is departing or continue reading to learn how to calculate holiday pay by hand.
How to calculate week's pay for different working patterns
Regular working patterns, like full-time employees are easiest to calculate but irregular working patterns like shift work and zero hour contracts require a bit more attention. This sections covers how to calculate how much a week of holiday is worth in £.
How to calculate a week's pay
Fixed hours & fixed pay (full and part-time workers)
A full week's pay
Shift work with fixed hours (full and part-time workers)
Average number of weekly fixed hours worked in the previous 52 weeks, calculated with average hourly rate
Casual work & zero-hours contracts
Worker's average pay in the previous 52 weeks (only calculate using weeks when the worker was paid).
Things to keep in mind when calculating weekly pay
If a worker received no pay in a given week, you can count back until you reach a week when they were paid. You’re allowed to count back up to 104 weeks.
If a worker has been working for fewer than 52 weeks of pay, you can simply calculate their weekly pay based on the full weeks they have worked.
If a worker is paid monthly, first calculate their average hourly pay and then use this number to find their weekly pay. Then continue with the same calculation for the average of the last 52 weeks worked.
Can I roll-up my employees’ holiday pay in their hourly pay?
Instead of paying their employees when they take holiday some businesses top-up their worker’s basic play to include their holiday pay. This is called ‘rolled-up holiday pay’, but is actually illegal. Holiday pay should be paid when a worker takes their annual leave.
How much holiday pay do leaving employees receive?
Calculating holiday pay when an employee contract is terminated confuses a lot of employers.
When an employee’s contract comes to an end, they receive any remaining holiday allowance as part of their final payment (this is referred to as ‘pay in lieu of holiday’). This applies whether that employee has resigned or you have terminated their employment for another reason.
Employees are entitled to any remaining statutory holiday. However, if you also offer your employees additional holiday entitlement, it’s up to you to decide whether your workers are entitled to get paid for untaken days or not.
You can use our accrued holiday pay calculator to determine how much holiday pay you owe an employee that is departing.
How to calculate holiday pay on termination of contract
When an employee hands in their notice or you terminate their employment contract, they’re still entitled to get payment in lieu of any remaining annual leave entitlement - pay in lieu of holiday.
If you offer your employees more than the statutory minimum allowance, whether they’re entitled to pay in lieu of this additional holiday depends on what you have stipulated in your employment contract.
Full time employee
A full-time employee has a statutory allowance of 28 days of paid holiday (if they work a 5 day week). This may include national holidays depending on your policy.
The formula for working out holiday pay owed is: (A x B) - C
A = Annual Holiday Allowance
B = Proportion of year to the date that they leave
C = Amount of holiday allowance already used
For example: if an employee is leaving 6 months into the year and they have already taken 10 days off.
5.6 * (6/12) - 2 = 0.8 weeks of paid leave in lieu is owed.
Part-time employees are entitled to 5.6 weeks of paid holiday every year. So, for example, if a part-time worker has a four day work week, they would be entitled to 5.6 x 4 = 22.4 days of paid holiday.
You would use the same formula to calculate holiday pay owed.
For example, a part-time worker is leaving 8 months into the year having already taken 3 days off. They typically have a four day work week.
5.6 * (8/12) - 0.75 = 2.98 weeks of paid leave in lieu is owed
Zero hours contract
Calculating how much you owe a zero-hours worker can be a bit more complicated. It’s easiest to work out their remaining entitlement by using the number of hours they’ve worked.
52 weeks in a year - 5.6 annual statutory holiday allowance = 46.4 weeks
5.6 / 46.4 = 12.07%
A zero-hours contract worker is entitled to holiday equivalent to 12.07% of the hours they’ve worked.
For example, if a zero-hours worker works 21 hours in a week, their entitlement would be:
21 * (12.07/100) = 2.5 hours
Time Off in Lieu (TOIL)
You can choose to offer your employees ‘time off in lieu’ instead of paying them for overtime.
Employees are allowed to take sick leave when they’re ill. For employees who are off work for fewer than a week, ‘self-certification’ is enough. However, if they are sick for more than a week they need to provide you with a ‘sick note’ or ‘fit note’ as evidence that they’re actually ill.
If they fall ill during a planned holiday, they can convert their holiday into sick leave. And statutory holiday entitlement continues to accrue whilst they’re on sick leave - regardless of how long they are off work.
If they end up with remaining holiday allowance because they have been on sick leave, this gets carried over.
Types of leave related to parenthood
Maternity leave can last up to 52 weeks. There are two phases of Maternity Leave: the first 26 weeks are called Ordinary Maternity Leave and the second 26 Additional Maternity Leave.
Expectant mothers can start their maternity leave a maximum of 11 weeks ahead of their anticipated due date, and they’re obliged to take at least 2 weeks of leave following the birth of their baby.
If an employee’s partner has a baby (through pregnancy or surrogacy) or adopts, they may be entitled to 1-2 weeks of paid Paternity leave or shared parental leave and pay.
Whilst on paternity leave, worker’s employment rights are protected.
Employees can choose to take 1 or 2 weeks of paternity pay (this is the same even if their partner has twins, for example). They must take their paternity leave consecutively (it’s not possible to split it up), and it must start after the birth or adoption and end within 56 days of the birth.
Shared parental leave (SPL)
An employee and their partner might be eligible to take Shared Parental Leave (SPL) if they’re having a baby (through pregnancy or surrogacy), or adopting or fostering a child.
Between them, they can share a maximum of 50 weeks of leave and 37 weeks of pay. SPL must be taken within one year of the child being born or joining their family. It’s up to the employee whether they take SPL all at once or in different blocks throughout the year.
In order to qualify for both SPL and ShPP, the employee and their partner need to fulfil the specific criteria, give the appropriate amount of notice, and also give up part of their maternity/adoption leave and pay.
For birth parents:
In order to qualify for SPL, the employee or their partner needs to take less than their 52 weeks of maternity/adoption leave and use the remainder as SPL, as well as taking less than 39 weeks of maternity/adoption pay and using the rest as ShPP.
Both parents have to have been working for the same employer continuously for a minimum of 26 weeks by the end of the 15th week before the due date and remain with the same employer until they begin their SPL. They also need to earn a minimum of £123 a week to qualify.
For adopters or surrogacy:
In order for both parents to qualify for SPL, both parents need to have been working for the same employer continuously for 26 weeks by the end of the week that the couple is matched with a child, or by the end of the 15th week before the due date in cases of surrogacy.
If one partner alone wants to take the SPL, there are different requirements:
For one person in the couple to take take the SP:
Their partner has to have worked for a minimum of 26 weeks out of the 66 weeks before the baby is due (does not need to be consecutive)
Their partner must have earned a minimum of £390 in the 13 of the 66 weeks (you can add up the highest paying weeks)
They need to have worked for you for at least 26 weeks by the end of the 15th week before the baby is due
Continue working for you until the start of the SPL
Parental leave is for eligible employees to take time off to look after their children. This can be for a variety of reasons: to spend more time with their children, to tour new potential schools, to accustom their children to new childcare arrangements, or to spend more time with family. This type of parental leave is unpaid.
Parents can take a total of 18 weeks of leave for each of their children up to their child’s 18th birthday – with a maximum of 4 weeks per child per year.
Parents need to take unpaid parental leave in week-long blocks rather than individual days, where a week is equivalent to their normal working pattern over 7 days.
Employees need to give you 21 days notice before they take unpaid parental leave and are carried over from job-to-job.
Can I delay an employee’s unpaid parental leave?
Yes, as long as you have a ‘significant reason’ (such as causing damage to your business), and it’s not being taken because of the birth or adoption of a child, and the delay wouldn’t make them ineligible to take unpaid parental leave (because their child would turn 18).
If you do choose to delay, you’ll need to explain why you’re delaying it in writing within a week of them making the response and give them a new proposed start date.
Compassionate leave is time off for family and dependents. If employees have an unexpected emergency that involves a dependent, they are able to take time off from work.