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Bank holidays - Are you calculating them correctly?

The Working Time Regulations 1998 state that employees who work 5 or more days per week are entitled to 5.6 weeks holiday per year. This is made up of 20 days annual leave, plus 8 days bank and public holidays. Sounds simple enough, right?

For this year and next year, things may not be as simple as they seem…

This year, due to the dates upon which certain bank holidays fall, the number of bank and public holidays awarded to staff will depend on when your holiday year begins.

If your holiday year runs from 1 January to 31 December, the number of bank and public holidays awarded will remain as 8 days. However, if your holiday year runs from 1 April to 31 March, this year's and next year's calculations will become a little tricky.

Due to the Easter bank holidays falling on 3 and 6 April in 2015 and then on 25 and 28 March 2016, there will be 10 bank holidays from April 2015 to end of March 2016. From 1 April 2016 to 31 March 2017 there will be 6 bank holidays.

Employers are advised to check the wording of their employee contracts as this will determine how the holiday calculations are usually made.

If the contract states that the employee will be awarded 28 days' holiday (pro rata for those who work part-time), inclusive of bank and public holidays, then the calculation year upon year will be the same, no matter when the bank and public holidays fall.

However, if the contract states that the employee will receive 20 days' holiday plus bank holidays, then employees will gain during this holiday year (April 2015-March 2016) but then receive less than their statutory entitlement next holiday year.

Of course if more than the statutory minimum of 28 days annual leave is offered - for example 25 days plus bank and public holidays - then the holiday entitlement would comply with the regulations.

If this issue applies to you, you may be wondering how you can correct it.

You may be considering making a payment in lieu of two extra days' holiday, but this would be contrary to the regulations. European law dictates that the purpose of paid holidays is to allow workers to relax away from work, for their health and well-being. This means that it is unlawful to make a payment for any statutory annual leave days.

The cautious approach would be to seek employee agreement by way of a consultation period, to either:

    • change the holiday year from January to December (although this could disrupt accounting procedures);
    • change the wording of the contract to say 28 days per year, including UK bank and public holidays;
    • carry over the additional days to the following holiday year.

However, this very same situation occurred in 2013 and there were no claims made about it. This is most likely because the public and bank holidays will always even out over the next holiday year anyway and so the employee will not really be losing out.

Whether you decide to address this issue with your current staff or not, it is advisable to revise your staff contract template, ready for the next time you employ someone, in order to avoid any potential issues in the future.