The increase in statutory holiday entitlement means that all employees will receive a minimum of 28 days statutory holiday entitlement, inclusive of bank and public holidays.
The Department of Trade and Industry (DTI) will up the statutory minimum holiday entitlement for full-time employees from 20 to 28 days in two phases:
- An increase from 20 to 24 days from 1 October 2007.
- A second increase from 24 to 28 days from 1 April 2009.
Why the change?
The increase in holiday entitlement has been driven by the government's commitment to address work-life balance and to help staff balance workload with other responsibilities.The phased changes will aid employers by:
- enabling payment in lieu of the additional holiday entitlement (the additional 0.8 weeks) to continue until 1 April 2009, as a temporary measure to aid transitional arrangements.
- providing an early-compliance incentive to employers that meet the full requirements by 1 October 2007.
Whilst the regulations will affect all businesses, it is envisaged that the small businesses will be hardest hit. The DTI estimates that for businesses with less than 50 employees, entitlements will have to be increased in around 25% of cases, compared to 16% for medium-sized companies, or 11% for large companies.
Things to consider!
- Employers have an obligation to notify staff of the change under the Employment Rights Act 1996. Ceridian can assist you in the practical transactional element, ensure you remain compliant, and help you to minimize administration costs
- Payment in lieu of taking leave
- Employers are no longer able to give employees the option of payment in lieu or “buying out” of the proposed 28 days leave. The Government does however, permit management the discretion to pay in lieu for contractual holidays in excess of 28 days.
- Carrying holiday over
- Some of the additional holiday entitlement may be carried over into the following holiday year subject to mutual agreement between the employee and employer. However, a compulsory minimum of four weeks' holiday would need to be taken in every leave year.
- Next Steps
- We advise that you plan for these increased holidays now. Although the legislation will not come into force until 1 October 2007, if your holiday year crosses this changeover date you will need to calculate an increase in holiday allocation for your staff from October 2007 to the end of your holiday year on a pro-rata basis.
For more information contact us, and our advisors will be happy to assist you.