In the first of a new series ‘What’s the answer?’ we ask two experts to provide their solutions to your problems; this week Andrew Smith of Towry Law and Alison Wallace of Steptoe & Johnson solicitors present their ideas on how to manage a flexible holiday scheme.

The question:
“We are looking to introduce a scheme where we buy or sell annual leave to our employees. It will be a maximum of five days. We are aware of some of the implications regarding benefits.

“Any ideas you have regarding the pros and cons of using this scheme would be greatly appreciated. How would you administer the scheme? Who would it alienate and what other benefits could we offer instead of this?”

From Madeline Boland – see the full question and members’ responses at: Any Answers

The Answers:
Andrew Smith, Employee Benefits Consultant, Towry Law

Be aware that after ‘selling’ holiday employees should still have 20 days holiday which can include bank holidays. However it is definitely, from my experience, seen as a benefit to staff especially if incorporated into flexible benefits.

Not only can a flexible benefits platform be used to administer the buying and selling of holidays but a ‘sell’ of day(s) holiday could then be used towards the purchase of some other benefit such as lifecover, critical illness, dental cover, gym membership (to name but a few) for both the employee and their family.

Alison Wallace, head of employment practice at Steptoe & Johnson

With the changed emphasis on quality of working life and the affordability of holidays, several short breaks throughout the year are much more prevalent than two week summer vacations.

You should bear in mind however time off for holidays is a health and safety issue and an employee’s holiday entitlement should never fall below the statutory minimum days although it is more likely that employees will want to buy additional holiday. You will have to bear in mind adequate cover during high season with staff, particularly for those with children who may be using additional holiday to cover childcare.

Consideration should also be taken about untaken leave which is carried over into another year. The Working Time Regulations do not entitle a worker to carry over leave but this is frequently provided for in a contract at least as far as the contractual entitlement is concerned or pay in lieu. Do be careful too of holiday leave taken during the course of a year of termination.

A worker may have taken more leave than their entitlement on termination because holiday leave is pro rata. This should apply to the additional days bought. There should therefore be a relevant agreement in place that if excess holiday is taken your employees will compensate you whether by repayment or undertaking additional work. Any policy must also be available to part-time workers, those going on and returning from maternity leave and those who require to work flexibly.

HRZone highly recommends that any answers are taken as a starting point for guidance only.