What happens to an employee’s holiday entitlements if they were dismissed and then re-hired within one month?
Section 85 of the Holidays Act 2003 outlines if an employee is dismissed and they are re-employed by the same employer within one month, for the purposes of their entitlements to annual holidays, sick leave and bereavement leave, the employee’s employment is deemed to be continuous.
However, if the employer can satisfy a Labour Inspector that they acted in good faith and not to evade any of their obligations under the Holidays Act, then the employee’s employment will not be deemed continuous and the employee will have a new commencement date from which their holiday entitlements will start accumulating afresh.
Section 85 does not apply to employees who are on a series of fixed term agreements. This is because a genuine fixed term agreement coming to an end and another one beginning is not considered a “dismissal”. Nor does the term “dismissal” apply to the situation where an employee resigns and they are rehired.
Reference: Ministry of Business, Innovation and Employment