Bank Holidays: what cost to your business?

With May being a particularly heavy month for bank holidays HR Manager, Laura Rigby, has cast a timely eye over how the employment contract you offer could be adding considerable costs to your business.

If you don’t work in retail, the chances are that you welcome bank holidays with both arms and eagerly anticipate the long weekends that the government so generously provide.

But, bank holidays can be a contentious issue for employers, with many workers misunderstanding what they are entitled to and many employers not knowing what they can and can’t do/should and shouldn’t give when it comes to bank holidays.

A common misperception is the assumption that employees are automatically entitled to bank holidays and that employers cannot make their employees work a bank holiday without providing some form of reward, be it time off in lieu or overtime at least time and a half. But fear not! This is not the case! (Cue a HUGE sigh of relief from many small business owners).

There is no statutory right for employees to take bank holidays off work or indeed receive extra pay for working them – it all depends on the terms of the employment contract, which should always include terms relating to holiday entitlement, including bank holidays and holiday pay.

I’m sure this comes as welcome news but before you dance for joy, make sure your template contract of employment doesn’t shoot you in the foot and hold you to more than you have to/want to give.

The statutory minimum holiday entitlement is 5.6 weeks (28 days for a full time employee) and there is no automatic entitlement to take off bank holidays in addition to this. In fact, many employers will choose to stipulate that holiday must be used to cover the bank holidays and this is perfectly ok.

In order to treat part time employees no less favourably than full time employees, part timers are entitled to a pro rata allowance for holidays, including a pro rata allowance for bank holidays. This is the case, regardless of the actual days that are worked, and this is the only fair and consistent method of calculation.

Unfortunately, there is no pleasing everyone and you’ll no doubt encounter some complaints about this method – but stand your ground: this way of calculating pro rata holiday entitlement is the only way which is fair to all parties and follows advice from the GOV.UK website and ACAS.

If an extra bank holiday is granted one year to mark a particular occasion, for example, a royal wedding or the Queen’s jubilee, employers may or may not have to honour the time off – it all depends on the wording of employee contracts. If it states that annual leave is a number of days “plus bank holidays” the additional day off will need to be granted. However, if the contract doesn’t mention bank holidays or if the number of bank holidays are stipulated, there is no entitlement to the extra days leave.

Our recommendation, however, would be to provide the extra day as a gesture of goodwill as it is a once in a blue moon occurrence.

Unsure about how to get this right, or simply need an ear to talk through your employment issues or HR needs, we are your HR180 Heroes so give us a call on 0845 458 5881.