Q. What does the new statutory minimum paid leave entitlement mean for my business?
A. From 1 April 2009, a worker’s minimum statutory paid leave entitlement will increase to 5.6 weeks – an additional 0.8 weeks’ leave. For anyone working a five-day week, this equates to 28 days’ leave. The entitlement includes bank and public holidays (of which there are usually eight per year), so for most people the minimum entitlement will often equate to 20 days plus bank holidays.
If you currently give less than 5.6 weeks’ holiday, it would be sensible to confirm the increase to your staff in writing to avoid potential disputes from those who may claim that you are in breach of your obligations. You will also need to pro-rate the increase, which applies in relation to the remainder of this holiday year. For instance, if your holiday year runs from January to December, staff this year will be entitled to nine months’ worth of the additional entitlement, or 0.6 weeks’ extra holiday.
If your calculations for holiday entitlement result in a part day, you are not entitled to round the day down. However, you do not need to round it up. In these circumstances, you could either allow workers a full day’s leave (but only pay for a part day), or allow them to leave early or arrive late one day.
Beware if you are close to the minimum leave entitlement and your holiday year runs from April to March. Good Friday and Easter Monday may fall in either April or March, which could mean that Easter falls twice in one holiday year and skips the next. If your contracts state that you will give staff 20 days’ holiday plus bank holidays, this would result in you giving 30 days’ holiday in one holiday year and only 26 in the next. You should consider reaching an agreement with staff whereby they will not be paid for one of the Easter breaks if two fall in one year, and confirm that they are entitled to 22 days plus bank holidays in the holiday years when Easter doesn’t fall.
If your employees are contractually entitled to more than the statutory minimum number of holidays, the increase won’t generally affect your business. However, it looks likely (following a recent decision from the European Court of Justice) that people who are absent for long periods for reasons other than holiday (such as those on long term sick leave) will be entitled to carry forward their minimum statutory holiday entitlement from year to year. This means that your liability will increase by 0.8 weeks’ holiday per year in these circumstances.
Finally, if you express holiday in terms of days rather than weeks, remember to recalculate the pro-rata entitlements of part time and casual workers. Remember also that, as before, the minimum holiday entitlements apply to ‘workers’, a wider concept than ‘employees’ and that you may be obliged to provide consultants who are providing services personally (rather than as employees of service companies) with paid holiday.
Will Winch is a solicitor in the employment group at Mishcon de Reya