Working Time (Amendment) Regulations 2007: an overview

Caroline Blackwood and Carys Wilson of Osborne Clarke begin a series of articles on the Working Time (Amendment) Regulations 2007 with a look at the increase to the statutory minimum holiday entitlement, which is being phased in between 1 October 2007 and 1 April 2009.

Under the Working Time Regulations 1998, workers are currently entitled to four weeks' statutory annual leave per year, which can include bank and public holidays. This means that employers are able to give full-time workers working five days a week only 20 days' annual leave, and require them to use eight of these to cover bank and public holidays.

Under the Working Time (Amendment) Regulations 2007, workers will be entitled to an additional eight days' statutory annual leave. This means that employers will have to give full-time workers the current 20 days' statutory annual leave, plus a further eight days to account for bank and public holidays. However, employers will not be required to allow workers to take their holiday on bank and public holidays and they may require them to use the extra days at other times. It should be noted that even though there are nine public holidays in Scotland, workers there will not be entitled to an extra day's leave - the 28-day maximum will also apply to them (although employers in Scotland can give their workers an extra day's contractual holiday if they wish).

The additional holiday entitlement will be implemented in two stages. Workers will be entitled to 24 days' annual leave from 1 October 2007 and 28 days' annual leave from 1 April 2009. There is no qualifying period for this additional holiday entitlement.

Statutory holiday entitlement will be capped at 28 days, although employers may give their workers more contractual holiday if they wish. This means that workers who work six days a week and who are therefore currently entitled to 24 days' holiday under the Working Time Regulations 1998, will be entitled to a total of only 28 days' holiday after 1 April 2009.

Provided that both the employer and the worker agree, the additional statutory leave entitlement may be carried forward into the next holiday year.

Transitional provisions

During the transition period (1 October 2007 to 1 April 2009), the additional leave entitlement will be calculated proportionally depending on when the employer's leave year starts. The first increase comes into force on 1 October 2007, so if an employer's leave year starts on 1 October, its full-time employees will be entitled to 24 days' annual leave from October 2007. However, many employers have holiday years that start at other times of the year, commonly on 1 January or the first day of the employer's financial year. In these circumstances, workers will be entitled to pro-rata fractions of a week.

For example, where an employer's leave year starts in April and its full-time employees currently receive 20 days' annual leave including bank and public holidays, they will be entitled to two additional days' holiday from October 2007 to March 2008.

The Government has published a Holiday Entitlement Ready Reckoner (on the DBERR website) to help both employers and workers calculate the new holiday entitlement.

Payments in lieu

From 1 October 2007 to 1 April 2009 employers will be permitted to replace the additional four days' leave with a payment in lieu. From 1 April 2009 payment in lieu of the additional leave entitlement will be permitted only on termination of employment.

Exemption

In order to encourage early compliance with the Regulations, employers that provide at least 28 days' leave prior to 1 October 2007 and stipulate that the additional eight days can be replaced with a payment in lieu only on termination and can be carried forward only into the following leave year will be unaffected by the Regulations. Many employers already provide at least 20 days' holiday plus bank and public holidays and this provision means that, for them at least, this change will not affect their business.

Next week's article will be a case study on implementing the Regulations.

Caroline Blackwood is a training and know-how associate in the employment, pensions and incentives department at Osborne Clarke (caroline.blackwood@osborneclarke.com) and Carys Wilson is a trainee (carys.wilson@osborneclarke.com).

Further information on Osborne Clarke can be accessed at www.osborneclarke.com.