Proposals to Increase Statutory Holidays

As previously reported in earlier Newsletters, the Government is proposing to extend the current statutory holiday entitlement to reflect the number of bank and public holidays. Under the Working Time Regulations 1998, employees are currently entitled to 20 days annual leave per annum which can, at present, include bank holidays. The UK recognises eight bank holidays namely New Years Day, Good Friday, Easter Monday, May Day, Spring Bank Holiday, Late Summer Bank Holiday, Christmas Day and Boxing Day. However, the UK is the only country in the EU to allow companies to include the public holidays within the statutory holiday allowance. However, it is proposed that the Work and Families Act 2006 will increase holiday entitlement for full-time workers to 28 days paid leave per annum (pro-rated for part-timers).

The statutory holiday entitlement is the minimum that an employee is legally entitled to. However, the employment contract may still provide for more than the legal requirement. The Government does not propose to introduce a statutory right for a paid holiday to be taken on a bank or public holiday, as many businesses may require staff to work on bank and public holidays. Therefore this will continue to be determined by the contract of employment. Furthermore, and contrary to the Working Time Regulations, the legislation may provide an option to carry over the additional eight days to the following holiday year, subject to the contract of employment. The Regulations may also provide an option for the additional holiday to be 'bought out' by the employer, that is payment at no less than single time rate may be made in lieu of the holiday, again subject to the contract of employment and through mutual agreement. In order to implement this new entitlement and taking into consideration the impact of the changes on businesses, the Government proposes to phase the introduction of the additional holiday entitlement by increasing the statutory entitlement initially from 20 days to 24 days on 1 October 2007. The introduction of the remaining additional holiday entitlement to increase the total to 28 days will be decided following further consultation.