When a public holiday falls during an employee’s annual leave, most countries do not count that day as annual leave. The public holiday is treated separately, and the employee’s leave balance is reduced by one day — not two. This protects employees from losing annual leave to public holidays they would have had off anyway.
This guide covers the rules across major markets, explains how to handle the calculation, and highlights the common mistakes employers make.
This article is general information, not legal advice.
Key Takeaways
- In most countries, public holidays during annual leave are not counted as annual leave
- The employee’s leave balance is reduced by one day, not two
- The public holiday is treated as a separate paid day off
- This rule applies in the UK, Australia, New Zealand, Ireland, and most other markets
- Failing to apply this rule leads to annual leave over-deduction
Country-by-Country Rules
United Kingdom
Rule: Public holiday during annual leave is NOT annual leave.
Under the Working Time Regulations 1998:
- If a bank holiday falls during an employee’s annual leave, the bank holiday is not counted as annual leave
- The employee’s annual leave balance is reduced by one day for the bank holiday that falls within their leave
- The employee receives a paid day off for the bank holiday separately
Example: Employee takes 5 days annual leave (Monday-Friday). Easter Monday falls on the Monday.
- Bank holiday (Easter Monday) is not counted as annual leave
- Leave balance reduced by 4 days, not 5
Australia
Rule: Public holiday during annual leave is NOT annual leave.
Under the Fair Work Act 2009:
- If a public holiday falls during an employee’s annual leave, the public holiday is not counted as annual leave
- The employee receives the public holiday as a separate paid day off
- Leave balance reduced by one day for the public holiday
New Zealand
Rule: Public holiday during annual leave is NOT annual leave.
Under the Holidays Act 2003:
- If a public holiday falls during an employee’s annual holidays, the public holiday is treated separately
- The employee receives relevant daily pay for the public holiday
- Annual leave is reduced by one day for the public holiday
Ireland
Rule: Public holiday during annual leave is NOT annual leave.
Under the Organisation of Working Time Act 1997:
- If a public holiday falls during annual leave, it is treated as a public holiday, not annual leave
- The employee receives a paid day off for the public holiday
- Annual leave balance is reduced by one day for the public holiday
Canada
Rule: Varies by province.
In most provinces:
- If a statutory holiday falls during annual leave, the holiday is not counted as annual leave
- The employee receives statutory holiday pay separately
- Leave balance is adjusted accordingly
United States
Rule: No federal requirement.
The FLSA does not address this scenario. It depends on:
- Company policy
- Employment contract
- State law (if applicable)
India
Rule: Public holiday during annual leave is NOT annual leave.
Under the Shops and Establishments Act:
- If a gazetted holiday falls during annual leave, the holiday is not counted as annual leave
- The employee receives a paid day off for the holiday
- Leave balance is reduced by one day for the holiday
How to Handle the Calculation
Step 1: Identify the Public Holidays
Check which public holidays fall within the employee’s annual leave period.
Step 2: Deduct the Public Holidays
Subtract the public holidays from the leave period. The remaining days are annual leave.
Step 3: Adjust the Leave Balance
Reduce the employee’s annual leave balance by the number of annual leave days only (excluding public holidays).
Example Calculation
Employee takes 10 days annual leave (1-12 June 2026) Public holidays in that period: Queen’s Birthday (1 June)
- Total days off: 10 working days
- Public holidays: 1 (Queen’s Birthday)
- Annual leave deducted: 9 days
- Public holiday paid separately: 1 day
Employer Obligations
Accurate Deduction
Deduct only annual leave days, not public holidays. Over-deducting leave is a breach and may result in backpay claims.
Communication
Inform employees that public holidays during leave are not deducted. This prevents confusion and builds trust.
Record-Keeping
Maintain accurate records of:
- Annual leave taken
- Public holidays during annual leave
- Leave balances after adjustment
Payroll Integration
Ensure your payroll system automatically accounts for public holidays during annual leave. Manual tracking creates errors.
Common Mistakes
Deducting Public Holidays from Leave Balance
The most common error. If a public holiday falls during annual leave, do not deduct it from the leave balance.
Not Informing Employees
Employees may not know that public holidays during leave are separate. Inform them to avoid confusion.
Inconsistent Application
Apply the same rule to all employees. Selective application creates grievances.
Failing to Adjust for Part-Time Workers
Part-time workers are entitled to the same protection. If a public holiday falls on a day they would normally work during their leave, it is not deducted.
Frequently Asked Questions
Does a public holiday count as annual leave?
No. In most countries, a public holiday that falls during annual leave is treated separately. The employee’s annual leave balance is not reduced for the public holiday.
What if I’m on long-term sick leave?
If a public holiday falls during long-term sick leave, the same principle applies — the public holiday is treated separately. The employee receives public holiday pay separately from sick pay.
Can my employer deduct the public holiday from my leave?
No. Deducting a public holiday from annual leave is a breach of employment law in most countries. The public holiday must be treated separately.
What if I’m a part-time worker?
Part-time workers are entitled to the same protection. If a public holiday falls on a day they would normally work during their leave, it is not deducted from their annual leave.
Does this apply to all types of leave?
In most countries, the rule applies to annual leave specifically. It may not apply to other types of leave (e.g., sabbatical leave, career break). Check your local laws.