Legal holiday entitlement is to be raised from 20 days a year to 28 under new government proposals.
The increase, which will be part of the Working Time Regulations, comes after unions pressurised the government to stop employers including bank holidays as part of the 20-day entitlement.
It is likely to be introduced in two stages, rising from 20 to 24 days on 1 October 2007, and from 24 to 28 days on 1 October 2008. The increase will be on a pro-rata basis for part-time workers.
Research by the Department of Trade and Industry found that groups standing to benefit most from the changes include women, part-time workers, low-paid workers and workers from minority ethnic communities.
DTI minister for employment relations Jim Fitzpatrick said: “Most companies already recognise that good holiday provision makes good business sense.
“Holiday entitlement can be a key factor in recruiting and retaining staff. Holidays are also important for productivity as they help minimise sick leave and keep people motivated and refreshed.
“We’ve worked closely with business and have wanted to make sure that they have time to prepare for the changes.
“People work hard and they deserve a decent break. We want to make sure everyone gets the holiday they are entitled to.”
An increase would move UK workers’ annual leave entitlement closer to that of workers in other European countries, where holiday allowance is typically more generous. Compared with the current minimum allowance of 20 days in the UK, for example, workers in Ireland are entitled to 29 days; the highest minimum entitlement is in Austria at 38 days.
The DTI has already consulted widely on the increase but has now launched a second consultation, which closes on 13 April, on the detailed proposals and draft regulations.
TUC secretary Brendan Barber welcomed the news but said he was disappointed the increase was to come in two stages.
“The change to leave is affordable and could have been introduced in one go,” he said. “The Government didn’t need to opt for phasing in, as the cost of introducing this measure has been overstated.
“Some employers will moan at having to give their staff additional holiday, but smart bosses already give their employees more than the minimum entitlement, because it makes good business sense to do so.”
The CBI also welcomed the announcement, deputy director-general John Cridland said: “This is good news for those staff who will see their annual leave increase but it will cost employers £4bn a year.
“With the government considering raising the National Minimum Wage for 2007 these extra costs must mean there is a smaller wage increase. Ministers must be mindful of hitting employers with a double whammy of extra costs.”
He added the CBI is also pleased the government has listened to business and allowed employees to carry extra leave days over if they and their employers wish to.
However, he said, employers would also like the ability to exchange the extra leave for extra pay if both sides agree and he urged the government to adopt this into the regulations.
The consultation can be found here.