Government launches consultation on extra holiday entitlement

In June 2006, the UK government launched consultations on making paid time off for bank and public holidays additional to employees’ current four-week annual holiday entitlement, thus increasing the entitlement of total annual paid leave to 5.6 weeks.

In its manifesto for the May 2005 general election (UK0504110F), the Labour Party stated that it would make paid time off for bank and public holidays additional to employees’ current statutory four-week annual holiday entitlement. This commitment, based on the July 2004 ‘Warwick agreement’ with trade unions on employment law reform and other matters (UK0409102N), was reiterated in the re-elected Labour government’s March 2006 employment relations strategy paper (UK0605019I). On 13 June 2006, the Department of Trade and Industry (DTI) duly issued an initial consultation document on increasing the holiday entitlement (259Kb PDF) 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.

Proposals for holiday entitlement

A four-week annual holiday entitlement was introduced in 1998 by the Working Time Regulations (UK9810154F), implementing the relevant provisions of the EU working time directive (originally adopted in 1993 and now consolidated in Directive 2003/88/EC). However, this four-week entitlement may currently include time off for bank and public holidays. There are eight permanent bank and public holidays per year in Great Britain and some employers have opted to grant their employees only four weeks’ holiday per year in total, including bank and public holidays in this figure. In this case, employers give their staff only 12 days of annual leave that they can take at a time of their own choosing.

The consultation document states that ‘it is anomalous that generally the lowest paid [employees] have bank holidays included in their annual holiday entitlement’. The government thus intends to make paid leave for bank and public holidays additional to the current holiday entitlement, thereby ‘bringing this disadvantaged group into line with the majority of the workforce’.

The government proposes to increase the current statutory holiday entitlement for workers ‘to reflect the number of permanent bank and public holidays’. As a result, the annual entitlement would increase to 5.6 weeks, pro rata for part-time workers and expressed as weeks to ‘reflect the differing work patterns that many staff work where daily patterns of work may vary considerably’. The statutory right of workers to paid holidays would be subject to a maximum of 28 days of paid annual leave.

The government proposes to phase in the additional leave, starting with an increase from 20 to 24 days (pro rata for part-timers) from 1 October 2007. However, it is seeking views on whether the remaining days of the new leave entitlement should be introduced:

  • in one stage, from 1 October 2008;
  • in one stage, from 1 October 2009; or
  • in two phases, increasing to 26 days from 1 October 2008 and 28 days from 1 October 2009.

According to Employment Relations Minister, Jim Fitzpatrick: ‘When we gave everyone the right to four weeks’ annual leave in 1998, two million workers got paid holidays for the very first time. There are still many people, particularly the lowest paid, who have to take bank holidays from their leave entitlement. The government is determined to put this right and ensure they get the extra leave they deserve.’

Initial social partner reactions

The Trades Union Congress (TUC) welcomed the proposals as a ‘victory for union campaigning’. General Secretary of TUC, Brendan Barber stated that: ‘The changes mean up to two million workers will get a well-deserved extra eight days’ paid holidays a year. The proposals will also close the loophole which allowed mean bosses to force staff to take bank holidays from their four weeks’ annual leave. They will no longer be able to do this and all full-time employees can look forward to a minimum of 28 days’ holidays a year.’

The Confederation of British Industry (CBI), the UK employer organisation, noted that it had ‘pushed very strongly for a phased introduction, and it appears that the government is minded to adopt this approach, with the first change – possibly an increase from 20 to 24 days – being introduced no earlier than 2007.’ For the CBI, ‘flexibility is also important – as the extra days will not fall under the directive, it should be possible for employers to offer staff a choice of benefits including pay in lieu of holidays’.

Next steps

The DTI is seeking views from businesses, trade unions, representative bodies, individuals and other parties on the implementation of the extended holiday entitlement, including the timescale for introduction and ‘flexibilities’ over how the additional holiday entitlement can be treated. The consultation closes on 22 September 2006, and draft regulations should be published for further consultation by the end of the year before being submitted for parliament debate.

Mark Carley, SPIRE Associates/IRRU

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