Minimum holiday entitlement to be increased

In June 2007, the government put regulations before parliament that will increase the statutory minimum annual leave entitlement in the United Kingdom from four weeks to 5.6 weeks by April 2009. The new legislation includes a two-stage increment from 20 days of leave to 28 days, and outlines specific provisions for part-time workers and payment in lieu, among other aspects. The amendment will benefit some six million workers.

In its manifesto for the 2005 general election (UK0504110F), the Labour Party promised to make paid time off for bank holidays additional to employees’ statutory four-week annual holiday entitlement; there are eight permanent bank holidays a year in Great Britain. In June 2006, the then Department of Trade and Industry (since renamed the Department for Business, Enterprise and Regulatory Reform, BERR) issued an initial consultation document on raising the holiday entitlement in two stages to 5.6 weeks a year – the equivalent of an increase from 20 days to 28 days for an employee working a five-day week (UK0607039I).

Following a further round of consultations launched in January 2007, the government laid a statutory instrument before parliament on 12 June to increase minimum annual leave entitlement to 5.6 weeks – the Working Time (Amendment) Regulations 2007. The regulations were due to be approved by parliament during July 2007.

Key changes

The main provisions of the regulations are as follows:

• statutory annual leave entitlement will be increased from four weeks to 4.8 weeks from October 2007 and then to 5.6 weeks – with a maximum of 28 days of leave – from April 2009. Any time off for bank and public holidays can be included in the additional entitlement; in other words, if workers already have four weeks of leave plus time off for bank holidays, their entitlement will not increase. The government had originally planned to introduce the second stage of the increase from October 2008, but has delayed this by six months following consultations, in the light of ‘cost pressures’ particularly for the health and social care sector;

• the entitlement will be calculated on a pro-rata basis for part-time workers – at 4.8 then 5.6 times their usual working week – regardless of whether they usually work on bank holidays;

• payment in lieu of the additional holidays will not be permitted from April 2009, except on termination of employment. However, until that date there may be payment in lieu of the additional 0.8-week holiday entitlement. This provision, included following the consultation exercise, is described as ‘a temporary measure to help employers with transitional arrangements, such as recruiting and training any additional staff to cover the increased holiday entitlement’;

• some or all of the additional holidays may be carried over to the following leave year by agreement between the employer and employee;

• no qualifying period will apply for the additional holiday entitlement, and partial days of leave need not be rounded up to the nearest full day;

• to ‘provide an incentive for early compliance with the regulations’, employers that already meet the full requirements of the new regulations as at 1 October 2007 – notably providing the equivalent of 28 days of leave – will not be subject to the detail of the regulations, as long as they continue to meet those requirements. This provision was added after the consultations.

Impact of regulations

BERR states that the increased holiday entitlement will benefit almost six million workers, corrresponding to some 19% of the workforce, who currently have less than 28 days of annual leave. Of these, around 3.5 million are women and 2.5 million are men, while 2.6 million are part-time workers – representing 31% of all part-time workers – and 3.4 million are full-time workers, constituting 14% of all full-time workers.

The impact is likely to be greatest in sectors such as hotels and restaurants, and wholesale and retail.

Reactions of social partners

Commenting on the new regulations, the then Employment Relations Minister, Jim Fitzpatrick, stated:

This extra time off will make a real difference in the lives of hard-working people … Businesses will benefit too – from reduced absenteeism and a workforce who are more motivated and productive. We have listened to all parties responding in the latest consultation, and we have agreed a number of changes in the way the new holidays will be brought in.

The General Secretary of the Trades Union Congress (TUC), Brendan Barber, welcomed the increased holiday entitlement, calling it ‘a real victory for union campaigning’. He added: ‘While many will be disappointed that, as a result of employer lobbying, the extra leave will be phased in, the government is still on course to meet its manifesto commitment.’

The Confederation of British Industry (CBI) is pleased that the increased entitlement will be phased in over a longer period than originally planned. In the words of its Deputy Director-General, John Cridland, a ‘big bang’ approach would have been ‘more painful for employers’.

Mark Carley, SPIRE Associates/IRRU, University of Warwick