From 1 October 2007 the Working Time Regulations (“WTR”) will be amended in order to the increase the statutory annual leave entitlement. Currently a normal full-time worker is entitled to four week’s leave and where a normal working week is five days this results in an entitlement of 20 days.

Bank and Public Holidays

The Government made a manifesto commitment at the last general election to increase the statutory entitlement in order that workers receive the four week’s holiday in addition to the eight annual bank and public holidays. However, while the changes will increase the statutory holiday entitlement the Government has not introduced a right not to work on a bank or public holiday. Workers are only entitled to bank and public holidays under contract and will still have to make a holiday request in the normal way in the absence of any specific contractual entitlement. In Scotland there are nine bank and public holidays but workers in Scotland will not receive and extra day of statutory entitlement to reflect this fact.

Two Stage Increase

The increase in entitlement will be introduced in two stages. Workers will become entitled to an additional 0.8 week’s holiday from 1 October 2007. For full-time workers working a five day week this amounts to an increase in statutory entitlement from 20 to 24 days per annum. The second stage of the increase will be on 1 April 2009 when the entitlement will increase from 4.8 week’s to 5.6 week’s holiday (24 to 28 days).

Statutory Cap

Workers who currently work six days a week are already entitled to 24 days in that four week’s holiday based on the longer week amounts to 24 days. However, such workers will not receive a commensurate increase in their statutory holiday entitlement from 1 October 2007. Although the new entitlement is 4.8 week’s holiday (equivalent to 28.8 days for a six day working week) the amount of days a worker is entitled to under the statutory scheme will be capped for the first time, at 28 days per annum, from 1 October 2007. That cap remains at the same level when the second stage of the increase is introduced on 1 April 2009.

Impact on Contracts

Although many workers will benefit from the increase in statutory entitlement (the Government estimates 3.5 million women and 2.5 million men will benefit) many others will not receive an increase in their overall entitlement as contractual provisions already grant them 28 days (or more) holiday. However, all employers should look at the precise contractual terms with regard to holiday entitlement. If the contract states that a worker is entitled to the statutory entitlement plus bank and public holidays the worker could be entitled to 32 days (24 + 8) from 1 October 2007 and 36 days (28 + 8) from 1 April 2009.

The amending regulations include a provision to allow an employer to avoid such an increase being claimed. Under new Regulation 26A the increase in entitlement does not apply to a worker whose employer under a “relevant agreement”, as at 1 October 2007, provides each worker with an annual leave entitlement of 1.6 weeks (or eight days) in addition to the current four weeks (or 20 days). A “relevant agreement” is defined as being:

  • a workforce agreement which applies to the worker;
  • a collective agreement which forms part of a contract between the worker and his employer; or
  • any other agreement in writing which is legally enforceable as between the worker and his employer (e.g. written terms of a contract of employment)

However, there are conditions that must be complied with in order for the exemption to the extra statutory entitlement to apply:

  • only leave days in excess of 28 may be replaced by a payment in lieu (except in case of termination); and
  • only leave days in excess of 20 may be carried over, and then such days must be taken in the following leave year.

The fact that it is expressly stated that each worker must receive the benefit of the additional holidays as at 1 October 2007 means that if a section of the workforce does not already have the additional entitlement then the employer cannot take advantage of the exception provided by Regulation 26A at all.

Curiously, those employers who do not grant an entitlement to all workers which allows them to take advantage of Regulation 26A will be able to make payment in lieu of the additional entitlement of 0.8 weeks until 1 April 2009. Thereafter, the playing field will be levelled so that in all cases only leave in excess of 28 days may be replaced by a payment in lieu, except in cases where the employment is terminated.

Part-time Workers

The entitlement of part-time workers to holiday can sometimes be a thorny issue, especially when some are perceived to get a greater benefit from the timing of bank and public holidays then others. All part-time workers will be entitled to the additional entitlement on a pro-rata basis. If a bank or public holiday falls on a part-timer’s normal working day then an employer can require, subject to notification requirements, that the worker take that day as part of their statutory entitlement.

Calculating the Additional Entitlement

It is more than likely that the introduction of the new provisions will not occur at the beginning of an organisation’s leave year. The increased entitlement for a leave year is calculated by multiplying the proportion of the leave year remaining after 1 October 2007 by the additional statutory entitlement (0.8 weeks). A similar process is involved for when the second stage of the increase in entitlement is introduced on 1 April 2009. In order to assist employers in making the correct calculation the Government has produced a Holiday Entitlement Ready Reckoner, which is available on the Department for Business, Enterprise and Regulatory Reform website at: www.berr.gov.uk/employment/holidays/page40455.html.

Changes Rounding Up Provisions

For workers in their first year of employment provision is currently made for rounding up a statutory holiday entitlement to the nearest whole day. From 1 October 2007 the holiday entitlement will still be calculated on a proportionate basis but the there will no longer be any rounding up to the nearest whole day.