Employees to get extra holidays

The government has announced that in the future employers will no longer be able to count public holidays as part of their employees’ annual leave entitlement.

Currently, firms can include the eight bank holidays within the number of leave days to which workers are entitled under the law. Most full-time workers can take four weeks of paid holiday a year.

Under the new regulations, however, that practice will stop and, eventually, employees will be able to claim a minimum of 28 days annual holiday.

The eight additional days of holiday are to be phased in over a period of two years. From October 2007, the annual leave entitlement will rise to 24 days; it will rise further to 28 days as from April 2009. Part-time workers will receive the extra holidays on a pro-rata basis.

Jim Fitzpatrick, the Employment Relations Minister, said of the new rules: “This extra time-off will make a real difference in the lives of hardworking people – a proper rest from work and more time to spend with their families and friends.”

He added: “Businesses will benefit too – from reduced absenteeism and a workforce who are more motivated and productive.”

As part of the government’s efforts to lighten the impact of regulations on business, the way in which the legislation is to be introduced has been modified to take employer needs into account.

“We have listened to all parties responding in the latest consultation,” said Mr Fitzpatrick, “and we have agreed a number of changes in the way the new holidays will be brought in.”

To encourage firms to implement the rules earlier and to simplify the arrangements for complying with the law, those employers who offer their staff 28 days leave or more by 1 October 2007 and who meet certain other standards will not be bound by the new legislation. While to help the transition from 20 to 28 days leave, the government has allowed firms to carry on buying out four days of the extra holiday entitlement until 1 April 2009.

Business groups have offered the new regulations a cautious welcome.

David Frost, the director general of the British Chambers of Commerce, said: “The government is right to tackle the counting of bank holidays as annual leave. It is counterproductive of businesses to deprive their workers of holidays that others who are employed get as a right.”

John Cridland, the CBI’s deputy director-general, approved of the government’s risk-based approach to the regulations: “Many businesses will welcome the Government’s decision to extend the phasing in period as it will help them change shift patterns and absorb transition costs. Others may also want to take advantage of the option to buy back extra holiday, with the agreement of staff, and pay them more wages instead - giving them more time to update pay structures. The majority of companies, which already offer 28 days’ leave, will be pleased that the Government has taken a risk-based approach and ensured that these regulations will not add to the costs of those who already comply.”

Others, however, expressed concerns. The Forum of Private Business warned that the additional eight days of holiday could have a detrimental impact on some small businesses.

Rebecca Leavers, the FPB’s research manager, said that the effect on smaller firms wouldn’t be confined to the cost of bringing in cover for employees on leave: “Although it is true that there will be a substantial cost for some firms in terms of reduced productivity or finding extra cover for workers on leave, the impact on smaller businesses doesn’t end there. There is also the administration of such a change. Contracts will have to be re-written, for example.”