An annual leave allowance forms a significant component of an employee’s remuneration package, and it’s essential that employers create policy according to employment regulations in the UK.
Policy language in employment agreements plays a key function in this, making certain that workers clearly understand in advance which holiday they are entitled to – whether this includes or excludes bank holidays.
This article will cover bank holidays within a yearly leave entitlement, how to determine a policy for your business, sound practice for contract wording, and how to proceed if your business is open during a bank holiday.
What does 28 days of holiday mean in the UK?
As far as wording in employment contract terms over annual leave is concerned, this practice happens a lot where employers promote ’28 days’ holiday’ without truly meaning it to be 20 days’ holiday, plus eight traditional bank days out.
It is essential to clarify this because, otherwise, staff are likely to believe they are due for 28 days of leave each year, plus bank holidays, a total of 36 paid days.
Staff are owed at least 28 days, or 5.6 weeks, annual leave each year – although it can be a decision by the employer to include bank holidays within this allocation, reducing the number of days staff are able to take.
Don’t forget to think about all aspects before developing your annual leave policy, including its finance implications and staff morale.
How should I word my policy in employment contracts?
It’s crucial that each staff member’s annual leave entitlement, and what it includes, is expressly stated in their employment contract. If the annual leave provision says it’s 25 days plus bank holidays, then it’s understood that the right is 25 days at an employee’s preference plus bank holidays – as we said, generally eight a year.
If a contract stipulates 28 days annual leave a year, it would generally be understood to include bank holidays – so, probably, 20 days at the choice of the employee, plus the eight bank holidays – but it’s not entirely explicit. In order to get your policy clearly across, a better wording for this policy would be ‘28 days, inclusive of bank holidays’.
For those who do not count bank holidays in their annual leave allocation, possible wording might be ‘20 days plus bank holidays’ or – by way of illustration of a more generous annual leave scheme – ‘25 days plus bank holidays’.
If your annual leave policy and what it covers are not clear to your workers, this leaves your rules open to misinterpretation and can cause issues for your business down the line. Workers can challenge your meaning, affecting team morale, or they can misinterpret it without checking with managers and have very little annual leave later in the allowance year.
What is best practice when it comes to bank holidays and annual leave?
Is best practice in banks to close banks for a full day?
There isn’t a one-size-fits-all approach to annual leave – it’s your choice and what works for your business – but what’s paramount is that your business policy is thoroughly clear to your staff and clearly understood.
Generally speaking, if your business shuts down during bank holidays, it might be less confusing for your staff if you exclude bank holidays from annual leave. This makes them know precisely how many days they can take off while the business remains open. My business operates on bank holidays – how does this affect holiday allowance?
Where companies are open on bank holidays and, as a consequence, expect staff to work during them, this must be outlined in employment terms.
Recall, however, that you can’t lawfully require staff to have a right to time off for bank holidays, although it’s best to spell this out at the recruitment stage. As we indicated, staff are automatically entitled to 5.6 weeks’ annual leave, but this need not include bank holidays.
Staff would be able to ask to use up part of their annual leave entitlement in order to enjoy a bank holiday, although this would remain at the employer’s discretion.
What happens if an extra bank holiday is created?
Every so often, the government also adds one-off bank holidays to the usual eight per annum. The latest additions have been for special days marking the Platinum Jubilee and the funeral of Queen Elizabeth II in 2022, and the King’s Coronation in 2023.
This can pose a dilemma for employers – are staff entitled to the additional day off for ‘free’ or can they be made to take this day off from their annual leave? The solution will rely upon the terms in your employment contracts.
There isn’t a legal right to work a bank holiday, so those who typically work bank holidays are likely to be required to work as usual.
In case of businesses closed for bank holidays, how this additional bank holiday will be awarded depends upon contract terminology. For instance, for a contract where it explicitly says 20 days of holiday plus bank holidays, the staff member will have the additional day for ‘free’, i.e., without using their allowance to enjoy this additional day.
Where a contract includes payment for 28 days including bank holidays, employers can require workers to utilise a part of their allowance to cover a new one-off bank holiday. Employers can decide whether to do this, however – some employers might allow all staff time off when a one-off additional bank holiday occurs, irrespective of the terms within their contract. This can be a wonderful morale-boosting move, and it can also assist with staff retention.
Final Thoughts
Last thoughts As an employer, you need to be explicit about exactly what your annual leave entitlement covers right from day one. Using precise language to ensure your allowance either does or doesn’t cover bank holidays means that your staff are not in any doubt about how much they can expect.
Recall, workers are not entitled to bank holidays by law, and employers have a choice how they treat bank holidays and annual leave.
