CIPD - Increasing the holiday entitlement: an initial consultation

Public policy

CIPD response to the consultation

Mike Emmott,CIPD Adviser, Employee Relations

The CIPD has consulted our 48-branch network on the issues raised in the consultation paper and our response is based on the input and feedback that we have received from them.

CIPD welcomes the opportunity to comment on the proposals to change statutory holiday entitlements. We also welcome the opportunities for meetings with DTI officials at which both sides can reach a better understanding of how specific proposals would be likely to impact on employers and employees.

General

There is a broad recognition by CIPD members that:

as one branch pointed out, “we are now living in a society/economy where every day of the year is considered as a potential working day”. Legislation on holidays should therefore not seek to specify individual days but should allow organisations and individuals to use holiday entitlement in a manner that best suits them;
the relevance of “bank holidays” is in any case questionable. The emphasis on Christian festivals at Christmas and Easter – recognising that for many their religious significance is muted - is increasingly open to question in a multicultural society where legislation outlaws discrimination on grounds of religion;
the aim in drafting legislation on holidays should be to “keep it simple”. Employers and employees should be free to use the holiday entitlement to suit their individual needs and preferences;
the proposals in the consultation paper are welcome insofar as they will prevent a minority of employers from exploiting the ambiguity about public holidays in the existing legislation;
the government should make clear that the legislation will increase the minimum holiday entitlement (as for example with the minimum wage); it should not be seen as a signal to push for increased holidays for the vast majority of employees who already enjoy more generous provision;
organisations should continue to be free to decide if they wish to offer “carry over” or “buy out”. The regulations should not interfere with this judgement, either by putting pressure on employers to adopt such schemes or inhibiting those already applying such schemes from continuing to do so;
the regulations should contain a clear and simple explanation of how employers can work out holiday entitlements, including how the regulations apply to employees working part time or flexible shift patterns.
our North of Scotland and Islands Branch has queried whether the regulations will apply to the offshore oil and gas sector.

Specific questions

In order to be helpful, we focused on four specific questions underlying the proposals:

1. Would CIPD members prefer a two- or three-stage process for phasing in additional holiday?

Members recognise the case for phasing in the new entitlement, so as to enable employers to plan ahead and spread any additional costs over a period. Most members would be happy with a two-stage process. We assume that in the first phase employees would be entitled to an additional 4 days (or 0.8 of a week), increasing to the full 8 days (1.6 of a week) in the second stage. Those employers who already provide at least 28 days holiday would not be directly affected by the increase and the phasing process would not apply to them. The proposals will have most impact in terms of costs on SMEs and micro-businesses, particularly in agriculture, catering and cleaning, some of whom might no doubt prefer a three-stage process (or at least a later date for implementing the full additional entitlement).

The start date for each stage of the phasing process should preferably be 1 April and not 1 October, since this will be in line with most employers’ budgetary processes and in many cases their holiday year (April to March).

2. Should CIPD press for maximum flexibility for employers, including the option to carry over some or all of the additional 8 days holiday from one leave year to the next?

Members are strongly in favour of maximum flexibility for employers to manage the framework of holiday entitlement, including whether or not employees should be allowed to carry over holiday from one year to another. They are concerned that the regulations should avoid the complications of carry-over and not make it an issue that employers are required to consider. As one branch said, “carry over will certainly continue to happen: we just don’t see the need to promote it in the regulations, which should remain silent on the matter”.

However, many members believe that carry over is a mixed blessing for employees and can be an administrative nightmare for employers. If employees are unable to take all their holiday in the appropriate year, it is unlikely that in many cases they will be able to “catch up” in the following year. Some employers prefer people to take all their holidays in the current year, to ensure they have sufficient breaks and don’t become over worked. On the other hand, it may be helpful for employees to be able to carry over a limited number of days holiday for a specific purpose. Most employers that allow carry over limit the number of days that can be carried to say 5. If the legislation allows for the full 8 days of additional holiday entitlement to be carried over, it should be made clear that this is at the employer’s discretion.

Some members have expressed concern that the same rules should apply to all 28 days, rather than having in effect two kinds of leave entitlement. However it is understood that EU legislation strictly precludes carry over of the current 20 days statutory entitlement, in which case this may not be possible while allowing for flexibility in relation to the additional 8 days.

3. Should the regulations provide an option for the additional 1.6 weeks to be 'bought out' by the employer?

CIPD believes that the regulations should allow employers to exercise the full flexibility they already have. Many of the issues discussed under question 2 above in relation to carry over are relevant here too. Some members are not interested in allowing employees to buy out holidays since this defeats the purpose for which holiday is provided and could be used to deny employees their right to take a proper break. As one said, “holidays are holidays”. One branch expressed particular opposition to trading holidays against other benefits on the grounds that “the holiday is an entitlement and not a benefit such as life insurance etc”. There are also concerns about the potential costs of buying out: many small businesses would be unable to afford to buy out the new statutory entitlement. But these are essentially arguments for allowing employers flexibility to adopt the solution that best fits their own circumstances.

4. Should any flexibilities be subject to mutual agreement between employers and members of staff?

Members agree that employers should consult their employees in some way before introducing any changes to holiday arrangements following the new regulations. The timing of individual employees’ holiday will normally be a matter for discussion and agreement between employer and employee. It should be made clear, perhaps in guidance, that employers will remain free to determine periods when leave must be taken eg because of annual closure, or when leave cannot be taken eg because of seasonal pressures. This means that employees cannot have totally unfettered freedom to take holiday when they choose.