Guidance for Employers
How to Avoid Issues with Contractual Holiday
This post looks at contractual holiday entitlements and contract wording. Your employment contract will have a clause that deals with the holidays and it will usually be pretty brief and will cover all the basics. Whilst the contractual holiday clause is rather short, the actual wording will be important.
How to Avoid Issues with Contractual Holiday
9 May, 2017
by Kristina Lukaviciute
We recently wrote about the potential mistakes that employers can make in calculating workers’ holidays entitlements especially when including the Bank Holidays. And whilst you may think this must be the only tricky area that businesses would need to worry about when considering holiday calculations and contractual holiday, we actually have a few more to draw your attention to.
So let’s look at contractual holiday entitlements and contract wording. Your standard employment contract will have a clause that deals with the holidays and it will usually be pretty brief and will cover all the basics. Whilst the contractual holiday clause is rather short, the actual wording will be important.
1. Contractual Holiday Entitlements
It is very common for standard employment contracts to give contractual rights to bank and public holidays. The typical wording might be something along the lines of ‘you will be entitled to 20 days and the public and bank holidays’.
An alternative is to give holiday allowance just in the number of days and then specify that these days include the 8 public and bank holidays in the UK. So the contract might say ‘you will be entitled to 28 days of paid holidays’.
Some contract are even more detailed and actually give a table or a list of all of the 8 public and bank holidays in the UK that the employees will be entitled to be off on.
When reading such clauses employees or even employers usually have no questions about it and so everyone seems to be happy with it…until…
2. Easter Falls Twice in the Financial Year
As you know, Easter holiday dates move around each year making this one of the potential traps for employers. If an employer operated a holiday year that runs from 1st April to 31st March and if their contract allows employees to be off on public and bank holidays without specifying the actual days, then the employer might get themselves into a pickle.
During some years, Easter can fall twice in the same holiday year. In 2015 Easter fell early in April and in 2016 late in March, this effectively meant that employees had 2 additional days off in one financial year and were short of 2 days in another year.
If the employment contract gives the holiday entitlement to bank and public holidays, then in these years when there are more than usual amount of bank holidays, employers would be in breach of contract if they were to not honour the additional days off. Also, where the year has a shortage of 2 holiday days, this means that the employer is not meeting the statutory requirement of making sure that employees have a minimum of 28 days holiday leave in a year. It might not look like a big deal as overall over the two years the entitlement evens out, this however cannot be considered in a two year manner and therefore poses some issues during both years.
3. Is it Bank Holidays or Public Holidays?
Interesting Fact (for the ‘geeks’ like me):
Which one is technically correct?
- Bank Holidays
- Public Holidays
- Bank and Public Holidays
It’s #3 – Bank and Public Holidays.
‘Bank Holidays’ are those fixed by statute (the Banking and Financial Dealings Act 1971) and ‘Public Holidays’ are common law holidays. So to be without error, always refer to the 8 days as Bank and Public Holidays.
4. What Can Employers Do?
The first thing would be to review your contract clauses and ensure that they are specific enough to avoid such circumstances. If you haven’t looked at your contract for a while, it might also be useful to also consider other clauses as employment law changes and there may be a need for an update.
If however, you find yourself in a situation where the holiday clause has let you down, then you would need to potentially agree with the employees to carry forward a 2 or 1 day leave from the previous year into the next year. The 2 days would need to come out of the employees’ holiday entitlement for one year and would be carried forward to another year. This way you would be able to cover the shortage of the holiday entitlement but any such provisions would need to be in agreement with employees.
It’s best to not wait until you are caught by an unexpected situation and to take proactive steps to ensure that your contractual holiday clause is legally sound. At Lighter HR Solutions we work with many clients in reviewing their contracts and policies and if yours have not been reviewed for a while just give us a call on 0203 319 1649 and we will be happy to help.