Statutory holiday entitlement is being increased from 1 October 2007. Sounds simple, however, applying the increase is not as straightforward as it sounds.
To help ease the pain the Government has produced a ready-reckoner, which we set out in this article for easy reference. We also set out guidance on how the increase works in practice and on the changes introduced by the Government.
What has changed?
The main changes are:
1- increase in statutory holiday entitlement (‘the additional entitlement’) from:
- 20 to 24 days (0.8 weeks) on 1 October 2007; and
- 24 to 28 days (0.8 weeks) on 1 April 2009 (subject to 28 day maximum);
This is inclusive of public holidays and should be pro-rated for part-time staff.
2- pay in lieu is allowed in respect of the additional entitlement until 1 April 2009;
3 - the additional entitlement can be carried over into the following holiday year (subject to agreement as set out below);
4 -rounding-up holiday during the first year of employment is not required from 1 October 2007 (however, rounding-down remains illegal); and
5 -the additional entitlement can be included as ‘non-working’ time for the purposes of calculating whether an employee comes within the 48-hour average maximum working week.
Does it apply to my organisation?
Yes, unless you meet the exemption set out below. In fact, according to the Government, six million workers will benefit from the additional entitlement. That amounts to 22 per cent of the UK workforce.
Exemption: If your organisation currently gives 28 days holiday (or 20 days plus public holidays or the pro-rata equivalent for part-time staff) or does so by 1 October 2007, then it is excluded from the provisions on additional holiday entitlement for as long as certain conditions are complied with. These conditions are that the leave:
- is provided to all workers;
- is provided within a ‘relevant agreement’ (this includes an employment contract and contract for services); cannot be replaced by payment in lieu except on termination;
- cannot be carried forward beyond the next leave year.
These conditions do not apply to any additional contractual annual leave in excess of the statutory entitlement.
Is there anything more I should be aware of?
- No freestanding right to public holidays: The new rules provide only for an increase to holiday entitlement and the increase is inclusive of public holidays. Workers do not have an additional right to take time off on a specific public holiday. Unless workers are contractually entitled to take leave on public holidays, they will need to make holiday requests to do so in the normal way. Equally, you can still require staff to take their leave on a public holiday, or at any other time
- Carrying over leave entitlement: Some or all of the additional entitlement can be carried over into the next leave year, subject to the agreement of both the worker and the employer in a ‘relevant agreement’. This would include an employment contract, contract for services or collective agreement if one exists. There is no automatic right to carry holiday over and employers would be able to refuse any such request. A minimum of 4 weeks holiday would still need to be taken (rather than carried over) in every leave year.
- There is no qualifying period for the additional holiday entitlement: All workers qualify for the additional entitlement, regardless of how long they have worked for your organisation.
- Calculating leave entitlement: The new rules provide for pro-rating the increased statutory entitlement for those workers whose leave-years do not begin on 1 October. If a worker’s holiday year begins before 1 October 2007, the increased entitlement for that leave-year is calculated by multiplying the proportion of the leave-year left to run at 1 October 2007 by the additional statutory entitlement (4 days or 0.8 weeks) introduced on that date. This can get complicated. Therefore the Government has introduced a ready-reckoner to calculate the pro-rated entitlement, which we have reproduced in this article for your convenience.
- Be careful of how contracts are worded: Many workers have contracts of employment entitling them to ‘statutory entitlement plus bank/public holidays’. Based on this wording the leave entitlement of such workers would, on the face of it, increase to 32 days (24 plus 8) from 1 October 2007. This is fine, as long as your organisation intends to be this generous! If not, it would be prudent to review and update workers’ contracts to ensure that the correct amount of leave is provided for.
- What should you do? Decide whether your organisation is effected by the changes, or whether it falls within the exemption set out above;
- If not exempt then:
- decide whether to allow for the additional entitlement to be carried forward into the next leave year. If so ensure that this is agreed with the worker in a relevant agreement (most likely a contract of employment or contract for services);
- decide whether to pay in lieu for any of the additional entitlement (up to 1 April 2009); calculate the pro-rated increased entitlement for your staff;
- check that contracts provide for the correct amount of leave and that you can require staff to take holiday at particular times; and if you need to make changes to leave entitlement or other matters referred to above then notify employees in writing of such changes.