Thus far, the British summer is proving as unpredictable as ever, with sun one week, and rain the next. But the holiday season is here, and small firms face the annual challenge of how to cope when staff want time away. Many business owners also admit to some confusion over the law related to holiday leave and pay, so what is the legal position for employers and employees when it comes to taking time off?
The rules on staff holiday entitlement are clearly laid out, though some generous SMEs do give more time off than the law insists upon. However, the basic legal requirements say:
- The minimum statutory annual leave for a full-time member of staff is 28 days or 5.6 weeks, including public holidays. Employers decide if they will include bank holidays and the like in a person’s annual entitlement and must stipulate this in employment contracts.
- Part-timers have the same entitlement – 5.6 weeks per annum – calculated on a pro-rata basis and based on the hours they’ve worked. So, if they’ve worked fewer hours than a full-time employee, they may be entitled to less leave.
- Self-employed workers aren’t entitled to annual leave, though agency workers may be, depending on their length of service. This law change occurred in 2011 under the Agency Workers Regulations.
The first practical thing that most bosses will worry about is how to keep the company running, and ensure that business isn’t disrupted. Much of this will depend on forward planning and the processes that an organisation has in place to manage how staff apply for holiday, and that they hand over work properly to others before they leave. Sensible business owners will check that invoices are still being seamlessly issued and collected even if the main finance person is absent, and that bills are being paid. Ask yourself who has the authority to make payments and sign cheques, and is there an appropriate person available to do this whenever necessary? Also, someone should be aware when major customers are away. Ensuring that money is flowing into the business and that payments don’t arrive late just because a key figure is away in another organisation is important, but easily overlooked.
Think about the people in your business and whether any individuals can be spared at the same time. Then, insist that your team ideally gives as much notice as possible to take time off. The general rule of thumb is that they should give their employer notice that is twice as long as the period they hope to be away. But when people take their holiday will depend in great part on what you’ve written in their contract. In this document you could specify that the business shuts down at a particular time of year and workers must take their holiday then. Alternatively, bosses can nominate certain days as closed for business, with annual leave necessarily taken – Christmas Day would be a common example. A contract should also outline the maximum period of holiday that a person can take off at any one time.
Insist on a proper handover between staff, and acknowledge the efforts of those taking on extra work. They’ll ensure the smooth running of your enterprise, so be aware of the strain they’re under, but emphasise, too, that the same will be expected of their colleagues in turn. Make sure that important customers know they’ll be dealing with someone different, and holidaying staff should activate an out of office email message including an alternative contact name and number.
The rates for holiday pay are also set in law and are based on normal working hours on the basic rate, excluding other additional payments or allowances, such as non-contractual overtime. But the legislation contains a few other points of which bosses should be aware:
- Employees can build up holiday entitlement during maternity, paternity or adoption leave.
- Staff can also accrue holiday while they’re off work sick.
- People can also choose to take holiday at the same time as sick leave.
- If boss and employee can’t agree about a holiday request and it develops into a full-blown dispute, the matter can be handled through a formal procedure, like any other workplace problem, as the Government explains on its website.
One controversial way that some employers have tried to get around giving staff benefits such as holiday leave and pay is to hire them on zero hour contracts. In fact, these arrangements, which are loosely defined as those where the employer doesn’t guarantee an individual work, do still require a company to give staff paid holiday, just as they would for any part-time worker. Some employers may not realise this, or find the calculations too complicated since the hours worked are typically so irregular. The Chartered Institute of Personnel and Development has offered some guidance through its website on zero hours contracts and holiday pay with the help of the law firm Lewis Silkin.
The use of zero hours contracts has come under fire from critics who deem them exploitative, but official data suggests that they’re not popular with smaller firms. The Office for National Statistics found that there are 1.4 million employee contracts in the UK that don’t guarantee a minimum number of hours, but only 12 per cent of businesses that employ fewer than 20 people were involved in using them. This compared with almost half of large firms that regularly use zero hours employment practices.
It’s good to hear that most SMEs want to do the right thing by their employees. And sometimes that may be insisting that employees take their holiday – regardless of the immediate inconveniences to a business’ operation. One in three British workers doesn’t take the time off to which they’re entitled, according to research from recruiter Adecco, many of them saying that they feel guilty about the burden their absence places on their colleagues. About 15 per cent of employees only take their full holiday because their boss insists. But it’s in the interests of employers to ensure that staff do take time away. Stress is the top cause of workplace sickness, and employee burnout is a real possibility if individuals don’t recharge their batteries. It can also be a chance to audit a person’s role properly when they’re not present to cover any errors or failings.
And, with all this talk about holidays, don’t forget yourself. The bosses of small firms are notoriously bad at letting go of the reins, with about six in ten staying in daily contact with the business even when they do take a break, according to a past study by Eclipse Internet. Two-thirds feel unable to take two weeks off in succession, and opt instead for a few days away here and there. Both you and your staff need to recuperate in order to be able to run the enterprise to the best of your collective ability. So, ensure that you have the systems and culture in place to allow everyone to enjoy this summer season. And whenever you choose to take them, Boost Capital wishes you all a very happy and well-deserved holiday.
Bosses who are still confused about calculating both full and part-time workers’ holiday entitlement can visit the Government’s website for further guidance.
Image courtesy of Grant Cochrane / FreeDigitalPhotos.net