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Increased holiday entitlement carries £4-billion-a-year cost

HOW does the idea of up to 40 per cent more paid time off every year sound to you? Wonderful if you are an employee, of course, but a nightmare if you own a marginal business that is only just covering its costs. 

At the moment, all full-time workers are entitled to a minimum of 20 days’ paid time off each year. A new law will raise this to 24 days from 1 October 2007 and 28 days on 1 April 2009. Part-time workers will be entitled to the extra holidays on a pro-rata basis.

Put another way, it means that the eight bank holidays that can be currently included in the 20 days of statutory minimum holiday will become additional to the 20 statutory minimum days from 2009. 

And the law – which the Government estimates will benefit 5.9 million workers nationally, and cost UK businesses £4 billion a year – is likely to have a particularly strong impact in Oldham. 

That is because more Oldham firms than the national average rely on agency workers and other seasonal and hourly-paid employees, who are commonly given only the statutory minimum paid-holiday entitlement of 20 days. 

Many employment contracts already provide workers with at least 28 days of paid holiday when taking into account bank holidays. The changes will not bind employers who already offer at lest this amount of leave, and they will not have to maintain their current holiday differentials after the new law comes into effect. 

But they will have to comply with certain new restrictions on carrying forward holiday and on paying employees in lieu of unused holiday. 

Under the new law, all full-time employees must take four weeks’ leave in each leave year. Unused additional holiday entitlement can be carried over to the following leave year – but only if the employer and worker agree. From 1 April 2009, no payment in lieu of the 28-day statutory-holiday entitlement will be allowed, except to an employee who leaves the firm. 

As the new law changes employment terms to benefit employees, employers do not need to reissue their employment contracts. They do, though, need to inform staff in writing of the increased holiday entitlement, either through a letter to staff or by a statement on pay slips, for example.

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Notes to Editors

Pearson Hinchliffe Commercial Law is a commercial law practice providing a range of legal service to business and commercial clients in Oldham and North Manchester.

As one of the leading law firms in the North of England, Pearson Hinchliffe’s mission is to be ‘the complete law firm’ providing the highest quality legal services to its clients. It does this by offering practical and cost effective, high quality legal advice for a wide range of clients.  Each client is catered for as an individual with their business and personal requirements taken into account which allows for a highly personalised service.

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