The government has announced its proposals to increase workers’ holiday entitlement from 20 days per year to 28.
The government said up to six million workers would benefit from an extra eight days holiday each year under the plans. Some employers currently include the eight bank holidays as part of workers’ 20-day annual leave entitlement.
The Department of Trade and Industry (DTI) is launching a second public consultation on the implementation of the changes. Statutory annual leave entitlement would be increased in two stages, rising from 20 to 24 days on 1 October 2007, and from 24 to 28 days on 1 October 2008.
The CBI welcomed the phased introduction of the new entitlement but warned the cost could hit employers hard.
John Cridland, CBI deputy director-general, said: “This is good news for those staff who will see their annual leave increase but it will cost employers £4bn a year.
“With the government considering raising the national minimum wage in 2007, these extra costs must mean there is a smaller wage increase. Ministers must be mindful of hitting employers with a double whammy of extra costs.”
Employers would also like the ability to exchange the extra leave for extra pay if both sides agree, Cridland said.
Research by the Department of Trade and Industry found that groups standing to benefit most from the changes include women, part-time and low-paid workers, and workers from minority ethnic communities.
Jim Fitzpatrick, minister for employment relations, said: “Most companies already recognise that good holiday provision makes good business sense. Holiday entitlement can be a key factor in recruiting and retaining staff.
“We’ve worked closely with business and have wanted to make sure that they have time to prepare for the changes.”
An increase would move UK workers’ annual leave entitlement closer to that of workers in other European countries, where holiday allowance is typically more generous. Workers in Ireland are entitled to 29 days; the highest minimum entitlement is in Austria at 38 days.