In its manifesto, the Government committed itself to ensuring that paid time off for bank holidays is given to workers in addition to the current four week holiday entitlement under the Working Time Regulations. The proposal in the draft regulations is to increase statutory annual leave entitlement from 4 weeks to 4.8 weeks (20-24 days for full time workers) from 1 October 2007 and to 5.6 weeks (28 days for full time workers) from 1 April 2009. The new draft regulations clarify some of the issues which were originally raised by employers:
- The plan to increase statutory annual leave entitlement from 4 weeks to 4.8 weeks on 1 October 2007 will go ahead as originally planned. However, the second stage which increases the entitlement to 5.6 weeks will be delayed, coming into effect on 1 April 2009, it originally had been intended that this would come into effect on 1 October 2008. The reason for the delay is to give employers the opportunity to prepare for this increase.
- There was a suggestion from some employers that the changes should be introduced to coincide with the majority of employer’s holiday years i.e. from 1 January 2008 and 1 January 2009, rather than October 2007 and October 2008 as originally proposed. There was concern as to how employers would calculate a worker’s entitlement if their holiday year did not start on 1 October. The Department for Business, Enterprise and Regulatory Reform (“DBERR”) (formerly the Department for Trade & Industry) has made it clear that the increases will be calculated proportionately depending on when the leave year starts. For example, if the leave year started in April, and the employee works a five day week and currently receives 20 days including bank and public holidays, the employee would then be entitled to two additional days from October 2007 to March 2008. The DBERR has produced an on-line calculator in order to assist employers in working out holiday entitlement. This is available on the DBERR website.
- Employees who already give their workers at least 5.6 weeks leave (28 days for full time workers) each year will be exempt from the new provision. This is to ensure that workers whose contracts currently provide that they are entitled to the statutory minimum annual leave in addition to bank holidays will not suddenly become entitled to an additional 1.6 weeks annual holiday by April 2009 (i.e. a total of 36 days holiday each year for full time workers).
- There are provisions which allow for payment in lieu in respect of the first tranche of additional holiday entitlement for a limited period. As a transitional measure, payment in lieu can be made in respect of the additional leave entitlement of 0.8 weeks (four days for full timers) introduced from October 2007 until 1 April 2009. Thereafter it will only be possible to make payment in lieu of the statutory minimum holiday entitlement on termination of the employment (as is currently the case). The DBERR have proposed this temporary measure to help employers with transitional arrangements, such as recruiting and training any additional staff to cover the increased holiday entitlement.
- Although carrying over any unused statutory holiday entitlement into the next holiday year is not currently permitted under the Working Time Regulations, it will be possible to carry forward the additional holiday entitlement introduced by these changes into the next leave year. This will have to be with the agreement of both the employer and the worker.
- As is currently the case, all part time workers will be entitled to the statutory minimum holiday on a pro rata basis. The DBERR guidance suggests that this will be the case regardless of whether or not the individual works on bank holidays.