Georgina Folkes, solicitor at Withy King, discusses the changes to the draft regulations on statutory holiday entitlement.

In July 2006, in line with its commitment to facilitate a better ‘work/life balance’ amongst the UK workforce, the government launched a consultation exercise regarding proposals to increase the minimum holiday entitlement.

Presently, all full time workers are entitled to a statutory minimum of 20 days’ paid annual leave, which can include bank holidays (i.e. an employee can give 12 days holiday plus bank holidays).

Although, in practice, many employers offer paid holiday in excess of the statutory entitlement (usually 20 – 25 days plus bank holidays) there are many occupations which only offer the minimum. These are most commonly low paid occupations such as cleaning, catering and the health and social care sectors.

Extension of holiday entitlement

The government intends to extend workers’ paid holiday entitlement from 20 to 28 days (or pro rata for part timers). The proposal outlined by the government is that an employer will be able to require a worker to take a day’s leave on a bank or public holiday but that there will be no statutory right for a worker to insist on taking leave on those days if the employer does not agree.

It was originally proposed to phase in the additional leave starting with an increase from 20 to 24 days (again pro rata for part timers) from 1 October 2007 and then a further increase from 24 days to 28 days from 1st October 2008.

However, the government has just announced its revised proposals for bringing in the changes to holiday entitlement following a period of consultation earlier on in the year, which has resulted in some changes to the draft regulations. The parliamentary process is now on-going and it is hoped that the new regulations will be approved by parliament in July, to give three months’ notice of the changes.

The changes to the draft regulations are as follows:

• To delay introduction of the second increase from 24 days to 28 days until 1 April 2009 due to the cost pressures on employers. The initial increase of four days will come into effect on 1 October 2007, as originally suggested.
• To enable payment in lieu of the additional holiday entitlement (the additional 4 days) to continue until 1 April 2009. This is a temporary measure to help employers with transitional arrangements, such as recruiting and training any additional staff to cover the increased holiday entitlement.
• To provide an incentive for early compliance with the regulations, whereby employers that already meet the full requirements of the regulations as at 1 October 2007 (giving the equivalent of 28 days’ holiday, without payment in lieu and any carryover for no more than one year) will be taken outside of the regulations, as long as they continue to meet those requirements.

The other main provisions of the draft regulations remain unchanged, namely:

• Any time off for bank and public holidays can be included in the additional entitlement (e.g. if your employees already get four weeks’ leave plus time off for all of the bank holidays, you will not need to increase their holiday entitlement).
• That the holiday will be calculated on a pro-rata basis for part-time workers, regardless of whether or not they usually work on bank holidays.
• That the increases from October 2007 and April 2009 will be calculated proportionally depending on when the leave year starts e.g. if the leave year started in April, full time workers who currently receive 20 days including public holidays will be entitled to two additional days from October 2007 to March 2008.
• To cap the maximum statutory holiday entitlement at 28 days, although employers may give more contractual holiday than that.
• That some or all of the additional holiday may be carried over to the following leave year with the agreement of both the employer and the member of staff.
• That payment in lieu of the additional holiday will not be permitted from 1 April 2009, except on termination of employment.
• That the additional holiday will not be excluded from the calculation of average weekly working hours under the Working Time Regulations.
• That there will be no qualifying period for the additional holiday entitlement and that partial days’ holiday need not be rounded up to the nearest full day.

For further advice on this topic, or for guidance on preparing for the changes, please contact Georgina Folkes at Withy King Solicitors on 01793 536 526 or email: georgina.folkes@withyking.co.uk