If your holiday year doesn’t run from January to December – Read this!

Whilst most employers run the usual January to December holiday year, some companies operate a holiday year which mirrors their financial year. Some very brave employers have a holiday year which follows each employee’s employment start date (administratively this must be a nightmare!)

Employers with an April to March holiday year will find themselves in a peculiar situation for 2016 through to 2018. Remember that all workers are entitled to a minimum of 5.6 weeks’ paid holiday, which means 28 days for a full-timer. Bank holidays count towards this entitlement. Due to the moving Easter holidays, rather than the typical eight bank holidays in a year, April 2016 – March 2017 will have only six bank holidays, while April 2017 – March 2018 will have ten. So what can you do about this?

Your first port of call is to check your contractual wording around holiday entitlement. This could throw up a number of different scenarios. Here are a few (using full-time workers as an example):

1. The contract states: “you are entitled to 20 days holiday plus all bank holidays”. For April 2016 - March 2017 this would mean that your employees would only receive 26 days holiday, which is obviously below the statutory minimum entitlement. You would therefore need to give them an additional two days paid holiday. For April 2017 – March 2018 they would receive 30 days holiday, but without specific wording which has anticipated this exact scenario it is unlikely you will be able to deduct the extra two days, as the entitlement is to “all” bank holidays.
2. The contract states: “you are entitled to 20 days holiday plus 8 bank holidays”. Again your employees would only receive 26 days holiday for April 2016-March 2017 as there are only six bank holidays. You would therefore need to give your employees an additional two days paid holiday to ensure they receive their statutory minimum entitlement. However, for April 2017 – March 2018 you could choose not to give employees two of the ten bank holidays (there is no automatic right to time off on a bank holiday). However, unless they agree otherwise, you would not be able to deduct these from the 20 day holiday entitlement as the contract says that they are entitled to 20 days holiday. You would instead have to get them to work two bank holidays, which may not be practical if the office is closed and certainly will not be popular. 
3. The contract states: “you are entitled to 28 days holiday inclusive of bank holidays”. The result of this is the same as point 2 above. You will have to give two extra days for 2016-2017 and you could choose to require employees to work two bank holidays for 2017-2018.

This situation is bound to arise again in the future so the next time you undertake a review of your contracts it would be worth considering whether you want to include wording in the holiday clause so that holiday entitlement can be adjusted each year if necessary to allow for this scenario. This may be even more desirable where you already offer holiday in excess of the minimum statutory entitlement and don’t want to be in a position of having to afford additional days to employees in a particular year.

Contact Doyle Clayton

If you are looking for advice on employment contracts we can help. To make contact call us on +44 (0)20 7329 9090 or email us on info@doyleclayton.co.uk