Increase in statutory leave entitlement
October 2007
The Government has estimated that 5.9 million workers will benefit from the forthcoming increase to statutory leave entitlement under the Working Time Regulations. Caroline Havard reports on the practicalities and pitfalls for employers.
The background
Under the Working Time Regulations 1998, workers are currently entitled to a minimum of four weeks’ paid annual leave each year, which can include public holidays. Employers are not permitted to pay workers in lieu of statutory leave other than on termination of employment or roll over statutory holiday to the following year.This is set to change from October 2007, when the Working Time (Amendment) Regulations 2007 – recently published in draft form – come into force.
What do the new Regulations say?
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On 1 October 2007 the current statutory minimum holiday entitlement
will increase from four to 4.8 weeks. This represents a four-day
increase from 20 to 24 days for someone working a five-day week |
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On 1 April 2009 there will be a second increase to 5.6 weeks. This represents an overall increase of eight days (to 28 days) for someone who works a five-day week |
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Although these additional eight days are intended to reflect the
eight public holidays in England and Wales, there is no obligation to
allow workers to take their statutory leave on public holidays |
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Despite the fact that the increases come into effect on 1 October 2007 and 1 April 2009 respectively, additional leave will be awarded proportionately depending on when the worker’s leave year starts. |
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Holiday entitlement will continue to be calculated on a pro rata
basis for part-time workers regardless of whether they usually work on
public holidays, so from October 2007 their annual entitlement will
increase to 4.8 times the number of days in their working week |
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When calculating the pro rata holiday entitlement of a worker who starts work during the leave year, employers will no longer be required to round up a partial day’s holiday to the nearest full day |
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Some or all of the additional leave entitlement may be carried over to the following leave year by agreement between the employer and the worker |
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From 1 April 2009 the additional leave entitlement may not be replaced by a payment in lieu, except on termination of employment |
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To ease the transition, however, the Regulations do allow employers to pay workers in lieu of the first instalment of additional holiday entitlement (the additional 0.8 weeks from 1 October 2007) until 1 April 2009 |
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Statutory holiday entitlement will be subject to a maximum limit of 28 days, even for workers who work in excess of a five-day week
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As before, employers will be able to offer additional contractual holiday to their workers |
Incentive for early compliance
Employers who already meet the full requirements of the draft Regulations before 1 October 2007, and who continue to do so after that date, will not be bound by the new legislation. In order to benefit from this provision, an employer must:|
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give all workers at least 28 days’ paid leave (or the pro rata equivalent); |
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allow payment in lieu of such leave only on termination of employment; and |
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restrict any carry-over of the additional eight days’ leave to the following leave year. (Note that carry-over is not permitted at all in respect of the first 20 days’ leave.)s |
For employers who are able to rely on this provision, advantages include the avoidance of the administrative costs associated with bringing in the additional holiday entitlement in two stages.
Existing contractual wording
Given that the Regulations will increase individuals’ statutory entitlement to annual leave, those workers who are already contractually entitled to “statutory and public holidays” will arguably benefit from an increase to 32 days’ leave on 1 October 2007 (the new 24-day statutory entitlement plus a further eight public holidays) and to 36 days on 1 April 2009 (28 statutory days plus eight public holidays).It is not clear that the provisions in the draft Regulations on early compliance, outlined above, adequately address this problem. Employers are therefore advised to verify all contractual documentation in advance of the 1 October 2007 deadline and make any necessary amendments to avoid challenge.
Practical steps
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Calculate workers’ increased holiday entitlement proportionately depending on when the leave year starts. The DTI intends to provide an online calculator to assist with this |
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Prepare to give all workers written notice of any change to their contractual holiday entitlement as a result of the new Regulations. This must be done within one month of the change, i.e. by 1 November 2007 |
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Remember that you are permitted to pay workers in lieu of the first instalment of their additional statutory holiday entitlement from October 2007 until April 2009 to ease the transition |
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Verify that the contractual wording governing workers’ existing holiday entitlement does not inadvertently award public holidays in addition to the new statutory entitlement |
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