The Department of Trade and Industry has announced proposals that statutory holiday entitlement will increase. What do the proposals mean for businesses?
Warning: This change has now come into force
Find up-to-date information on holiday entitlement here or use the resources below:
Q How much holiday will staff be entitled to?
A The Working Time Regulations 1998 currently entitles workers to four weeks’ paid holiday each year, including eight bank/public holidays. The proposals would entitle workers to four weeks’ paid holiday each year, plus the equivalent of eight paid bank/public holidays.
A It is proposed that on 1 October 2007, statutory holiday entitlement would rise to 4.8 weeks (24 days for an employee working a five-day week), increasing again to 5.6 weeks on 1 April 2009 (with a maximum annual statutory entitlement of 28 days).
Q Could employees demand time off on bank holidays?
A Some workers may be contractually entitled to take leave on bank/public holidays, but there will be no statutory right to take leave on bank/public holidays. If the proposals come into force, where a worker is required to take statutory leave on a bank/public holiday and they are on some other leave that day (such as maternity or sick leave), they would generally be entitled to take another day instead, so statutory holiday entitlement is not lost.
Q What happens if our holiday year begins before 1 October?
A Additional holiday entitlement should be calculated by multiplying the proportion of the holiday year left to run by the additional holiday entitlement due from 1 October. For example, if your holiday year starts on 1 January, in 2007 an employee working five days a week would be entitled to four weeks’ holiday for 12 months, plus 0.8 weeks’ additional entitlement for three months (3 ÷ 12 x 0.8 = 0.2 weeks) a total of 4.2 weeks. In 2008, the worker would be entitled to four weeks’ holiday for 12 months, nine months’ additional entitlement at 0.8 weeks (9 ÷ 12 x 0.8 = 0.6 weeks), plus three months’ additional entitlement at 1.6 weeks (3 ÷ 12 x 1.6 = 0.4 weeks) a total of five weeks. In 2009, total holiday entitlement would be 5.6 weeks.
Q What about part-timers and those working more than five days a week?
A Part-time workers would have a pro-rata entitlement. For example, if someone usually works three days a week, a week’s holiday will be three days. With a leave year starting on 1 January, that worker’s holiday entitlement for 2007 would be 12.6 days (4.2 weeks x 3 days), for 2008, 15 days (5 x 3 days) and for 2009, 16.8 days (5.6 x 3 days). If an employee works six days a week, holiday is calculated in the same way, but the 28-day cap applies. If the holiday year starts on 1 January, that worker would be entitled to 25.2 days’ holiday in 2007, and 28 days’ holiday in 2008 and 2009.
Q Can we round entitlement up or down?
A It is proposed that the total (5.6) weeks’ holiday would not be rounded up to the nearest full day. However, you may want to do this for ease of administration. You will not be able to round down.
Q Will there be a qualifying period of service for entitlement to additional holiday?
A No. But in the first year of their employment/engagement, workers could be limited from taking more holiday than they were deemed to accrue (as with the current four-week entitlement).
Q Will workers be entitled to carry over additional holiday?
A The regulations do not allow the four-week entitlement to be carried over from one year to the next. However, some or all of the additional holiday may be carried over to the following leave year, subject to agreement between the business and the employee. At least four weeks’ holiday will still have to be taken each year.
Q Can we pay in lieu of holiday?
A Payment in lieu of statutory minimum holiday is not currently allowed, except on termination. It is proposed that the same rules will apply to additional entitlement.
Q What should I do now?
A You should review workers’ holiday entitlement. If the changes are introduced, entitlement should be increased if you provide less paid holiday than the statutory minimum. Entitlement should be reflected in workers’ contracts, policies and handbooks. These documents should be checked to ensure entitlement is clear. Otherwise, workers already contractually entitled to 28 days’ paid holiday could claim windfall holiday.
By Sarah Johnson, partner, Manches