Mismanagement of annual leave can have a dramatic impact on your company’s business, as demonstrated by Ryanair’s cancellation of hundreds of flights after it admitted “messing up” the planning of pilots’ holiday in the summer of 2017.
Here are some of the most common problems with managing annual leave, to help you to avoid them:
1. Encourage your employees to take holiday throughout the year
Allowing staff to build up too much leave and not spread out their holidays over the year can be a major problem for you. This could occur if there is an excess of work to do or if the business is struggling because of the economic climate, meaning that employees feel they are not able to take annual leave without putting their jobs at risk.
You should encourage your employees to plan and take annual leave. The responsibility for monitoring it is usually allocated to line managers, who should check their employees’ annual leave balance and remind them that they need to use the holiday up by the end of the leave year.
- Do encourage your staff to submit dates for their holiday as far in advance as possible.
- Do review regularly whether or not employees have taken, or at least planned to take, some of their holiday.
2. “Buying out” annual leave entitlement
You may be tempted to offer staff a cash substitute in return for giving up their annual leave entitlement. However, it is a fundamental principle of annual leave law that employers can’t give employees payment in lieu of their minimum statutory annual leave entitlement (i.e. the 5.6 weeks guaranteed under UK law). The exception to this is on termination of employment. When an employee leaves a job part way through the holiday year, they will be entitled to be paid for any accrued statutory holiday not taken by the date they leave.
- Don’t give in to employees’ requests for pay in lieu of holiday.
3. Carrying over of excessive amounts of holiday
You could consider allowing employees who have not taken their full entitlement to carry over holiday into subsequent leave years. Current EU law prevents you from carrying over the first four weeks of your employees’ statutory annual leave, except when an employee is unable to take the leave because of sickness absence.
Beyond the first four weeks of statutory annual leave, you can allow employees to carry forward periods of holiday. If you do, you should have a rule requiring the excess leave to be used up within the first few months of the next holiday year.
- Do remind your employees now and then how much annual leave they have outstanding.
- Do ask any employee who hasn’t taken any holiday or submitted any holiday dates by a certain date – such as the middle of the holiday year – to book some holiday dates as soon as they can.
- Don’t wait until near the end of the holiday year before reviewing whether or not employees have taken all their holiday.
- Don’t make staff feel guilty about taking holiday.
4. Allowing too many employees to take leave at the same time
One of the biggest dangers for employers is the effect on the business of allowing too many employees to take time off during particular periods, typically in the summer or at Christmas.
Line managers can sometimes be reluctant to turn down employees’ holiday requests, particularly if an employee has already booked a trip or has a family commitment. However, as their employer you don’t have to agree to a worker’s request to take holiday at a particular time, unless the contract of employment contract says otherwise.
You should have a clear policy on holiday requests, such as ‘first-come, first-served’ approach. Line managers should be brave enough to turn down holiday requests (with the correct notice) when the timing of leave would cause the business difficulties.
- Do ensure that holiday leave is planned in such a way that the department has adequate cover at all times.
- Don’t leave the matter of holiday to chance.
- Don’t take the view that it’s up to each individual to decide whether or not they want to take holiday.
5. Paying your employees the right amount during annual leave
The calculation of holiday pay needs to be done correctly and can no longer be based on just an employee’s basic pay.
Case law has established that pay during annual leave should now include other payments such as overtime pay (both compulsory and voluntary), standby/call-out allowances, shift premia and travel allowances.
You need to decide on a sensible approach to holiday pay calculations, including the length of time used to calculate the average and what allowances should be included.
These are probably the most common issues of annual leave that you will face an employer. Encouraging your employees to take their full allowance of holiday is not only good practice for the business – it is also vital for the health and welfare of your employees. Ensuring that employees take regular time off will help you to build a stronger, more productive workforce in the long run.
If you have any questions about dealing with holiday issues, do get in touch by calling 0118 940 3032 or emailing me here.