HR Industry News

Holiday costs to rise for employers

— 28 June 2007 —

Employers face a hike in wage costs of up to three per cent following the introduction of new holiday entitlement regulations.

Legal experts say that the Working Time (Amendment) Regulations 2007 will have a real financial impact on a large number of companies and many will need to adjust their holiday policies.

The new regulations come into force on 1st October this year and will see the holiday entitlement of full-time workers rise from 20 days paid annual leave to 24 days - inclusive of statutory bank holidays. From 1st April 2009, this will rise again to 28 days.

According to law firm Bird & Bird, this translates into a 40% increase in holiday entitlement and wage costs for some employers.

Elizabeth Lang, employment lawyer at Bird & Bird, said that the change will have a particular impact in sectors that rely heavily on agency workers and other seasonal and hourly paid workers.

Even employers who currently offer more than 28 days paid holiday to their workers will have to make adjustments to comply with the new regulations.

There will be less freedom to allow employees to carry holidays over from one year to another and to make payments in lieu of holiday, she added.

In contrast, Paul Avis from Ceridian comments, “Ironically the real problem here is that many employees are simply not taking enough holiday! The Croners 2005 Holiday Debt Survey found that a third of all UK workers forfeited their holidays. As an organisation that promotes work life balance, we actively promote employees taking their full entitlement to keep them productive.”

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