There is no statutory entitlement for an employee to have a day off on a bank holiday. Whether they are expected to work on a Bank Holiday or not is usually set down in their contract of employment. There is also no statutory requirement for hours worked on a Bank Holiday to be paid at a rate higher than that normally paid on any other day. Nonetheless, the matter of payment for working on a Bank Holiday is determined by the employee’s contract of employment. If the contract provides that an employee will be paid for the hours worked on a Bank Holiday at an overtime rate higher than the normal rate, then that is what you should do. Similarly, if the contract states that hours worked on a Bank Holiday will be paid at normal rate, the normal rate should be paid.
As a general rule, payment at a rate lower than that specified in the employee’s terms and conditions could lead to various claims at Tribunal, including breach of contract, unlawful deduction from wages, or ultimately constructive dismissal
However, regardless of whether you pay at normal rate for the hours worked on a Bank Holiday, or you pay at an overtime rate, you must also make sure that an employee who works on a Bank Holiday may take a day off in lieu at another time in the holiday year. This applies whether you give employees the current statutory minimum holiday entitlement of 5.6 weeks, or you give in excess of that. This works out at 28 days a year for someone who works 5 days per week.
Paying the employee double time as monetary compensation for working on a Bank Holiday and not letting them take another day off means that you will not be meeting your obligations under the Working Time Regulations 1998 where the employee is continuing in employment. Employees must be given the opportunity to actually be away from work for the whole of their holiday entitlement. The only time you can pay in lieu of holidays is when employment is terminated and you make a payment in lieu of holidays accrued but not taken at the point of termination.
If you require any further clarification please contact the Peninsula Advice Service on 0800 028 2420.