26 May 2024, 15:19
By Jo Eccles Jul 13, 2014

How employers can avoid holiday season headaches

With the summer holiday season fast approaching, national business organisation, the Forum of Private Business, is reminding small business employers to make sure they are up to speed with employee rights to holiday entitlement, and effectively manage leave requests whilst ensuring business needs are met.

“Many businesses do have a structure that ensures adequate cover in the summer holiday season, but some can struggle due to the lack of staff and the money to provide cover if needs be,” says Jo Eccles, business advisor at the Forum of Private Business (FPB).

“So it is important that small business owners manage staff holidays effectively to ensure that the business isn’t affected by absences.”

Key areas to consider when heading off the potential annual leave headache are:

Make sure you are up to speed on holiday entitlements

It’s important that you are up to speed with holiday entitlements. All full-time employees have a statutory right to 28 days (5.6 weeks) annual leave. Part-time workers are entitled to the same level of holiday pro rata based on the number of hours they work. However, this is the legal minimum, and you can choose to give more than the legal minimum – for example, some employers allow workers to accrue additional leave entitlement based on years of service, or to build up extra hours as time off in lieu in place of paid overtime.

By law, your employees cannot demand specific dates for their holiday, and you do have the right to refuse an employee’s leave request if the period they are asking for doesn’t suit your business' requirements. In addition, you can ask members of staff to take their annual leave due to predicted quiet periods, seasonal office closures, or any other reason that suits the business, and they cannot refuse to take their leave in these cases.

"It is important that small business owners manage staff holidays effectively to ensure that the business isn’t affected by absences”

Be clear on rules around holiday pay, sickness and bank holidays

In terms of holiday pay, employees start building up their paid leave entitlement as soon as they start work, and this is not subject to a minimum period of employment. As with holiday entitlement, part-time workers' pay should be calculated pro rata based on the number of hours they work. If necessary, you should also make sure that you are up to speed with the different ways in which pay needs to be calculated for people working variable hours, or shift workers.

Also, it is worth noting that a recent EU ruling means that full-time and part-time workers that are usually paid commission should be paid this while on leave as part of their holiday pay. This applies where a worker’s pay is made up of a fixed salary and a regular variable amount that is ‘intrinsically linked’ to their role, such as a sales-related commission. If this is likely to affect your business you should look at their current commission structures and related documents. In addition, you should look at your current payroll systems to check if these are able to calculate the average historical commission payments that these employees would be entitled to in calculating holiday pay.

If one of your workers falls sick while on leave, there is nothing stopping them for taking annual instead of sick leave, or to cancel their annual leave request to take sick leave. However, if your employee was genuinely ill they should comply with the notification and evidence requirements you need to treat the time away as sick leave and pay accordingly.

Remember that employees do not have a statutory right to have leave on bank holidays, unless this is stated in the employee’s contract. Bank holidays can also be included in the 5.6 weeks leave entitlement, or in addition to the employees' annual leave entitlement, but again this should be clear in their contract of employment.

Finally, if an employee returns a few days late from their holidays, legally this is regarded as absent without leave and they are not entitled to be paid. In addition, you may wish to take this up as a potential disciplinary matter.

Make sure you have a clear policy on dealing with leave requests

Being clear on your employer obligations is just part of the story when it comes to effective holiday and leave management. The key is ensuring that you treat all requests fairly and consistently, and this can be best achieved by ensuring you have a clear policy on leave requests, for example:

* An agreed minimum period of notice when requesting leave, to ensure suitable cover can be arranged if necessary

* Post a holiday planner in a public space in the office, or use a shared calendar on your IT system which can ensure that the process is transparent and that members of staff can plan around each other where possible

* Ensure that leave requests do not discriminate against particular employees – for example, if an employee wants to take off time in a busy period for a religious festival, you may want to consider this request where you may not consider such requests for leisure purposes

* Ensuring that your policies on leave entitlements, holiday pay, leave requests, etc are included in your terms and conditions of employment

Jo concludes: “Clear policies and effective planning will ensure that you are able to adopt a good balance between operating your business and the needs of your staff, and avoid unwanted holiday headaches later down the line.”

Forum members can obtain further information and advice on their rights as an employer regarding annual leave, and other employment related issues, by contacting the FPB.

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