Annual leave 2007: paid holidays in 135 organisations

Our survey finds little current movement in annual leave entitlements, but with legal reform in October 2007 and again in October 2008, change is in the air

Legal position on annual leave

About this research

Benchmarks for paid holidays

Benchmarks by sector

Bank holidays: paid or unpaid

Government plans to increase entitlements

Employers' plans to increase entitlements

Holiday arrangements in 135 organisations

Additional resources

 

Key points

• Our survey of 135 employers shows a median entitlement to paid holidays (excluding bank and public holidays) of 25 days, but with two main peaks at 20 and 25 days.
• The most common arrangement, for 81 of the 261 employee groups covered, is for a right to 25 days' paid holiday each year.
• The eight bank and public holidays (in England and Wales) are given as additional paid leave by 93.5% of employers surveyed.
• Just 14.1% of employers surveyed currently plan to change paid holiday arrangements when the government increases the legal minimum from 20 to 28 days (including bank and public holidays).

 

By Mark Crail

Holidays are among the most basic of employment terms. Yet there was no statutory right to paid annual leave until 1998, when the Working Time Regulations came into force. Since then, the legal minimum has risen to four weeks for a full-time worker, and the government has announced its intention to increase the entitlement to 28 days.

In this survey of 135 employers, we look at

• current benchmarks for employee holiday entitlement;
• basic annual leave entitlements for 261 employee groups;
• whether employers count bank and public holidays as part of this basic entitlement or as paid additional leave; and
• government plans to increase employees' right to paid holidays from 20 to 28 days.

 

Legal position on annual leave entitlement

As a result of the European Working Time Regulations, the government brought into effect the Working Time Regulations from 1 October 1998, instituting a right for most workers to take three weeks' paid holiday each year. This was the equivalent of 15 days for a full-time worker, pro rata for part-time workers.

This entitlement rose to four weeks from 23 November 1999 for all those with 13 weeks' service, with the qualification period subsequently removed from 25 October 2001. Many groups of workers in the transport industry were (only?) given the right to paid annual leave from 1 August 2003. Junior doctors came within the scope of the Regulations from 1 August 2004.

The Regulations apply not just to employees but to the wider category of workers - including freelances, casual or seasonal employees, agency workers and many work experience trainees. It does not apply to people who are self-employed.

The Work and Families Act 2006 gives ministers the power to determine the amount of leave to which workers are entitled, and the government's intentions in relation to this are discussed later in this article.

A full guide to holidays and holiday pay can be found in the HR & Compliance Centre Employment Law Reference Manual. http://hrcentre.uk.brightmine.com/reference.asp?TOPID=2&SLID=12&ChapID=4&SecID=408

 

About this research

IRS invited selected HR practitioners by email to take part in our online survey of annual leave arrangements. We received useable responses from individuals at 135 organisations who provided details on behalf of a total of 261 employee groups.

In total, these organisations employ 910,705 people, ranging in size from just 24 employees to 46,000.

Our panel of organisations is fairly evenly divided by size band:

• 29.6% employ fewer than 250 people;
• 31.9% employ between 250 and 999 people; and
• 38.5% employ 1,000 or more people.

The median organisation - the one in the middle of the size range - has 741 employees.

By broad sector:

• 31.9% of our panel are manufacturing and production companies (including chemicals and pharmaceuticals, construction and print firms);
• 53.3% are private sector service companies (including retailers and wholesalers, banks and insurers, law firms and those in transport and logistics); and
• 14.8% are public sector organisations (central and local government, education and the NHS).

Rather more than two-fifths of respondents (42.2%) recognise trade unions.

Just under one-third (31.1%) of organisations on our panel have the same terms and conditions of employment for all workers.

Most commonly, four out of 10 (41.5%) have two distinct groups with different holiday entitlements. This arrangement is particularly strong in the manufacturing sector, where 58.1% of respondents report different entitlements, typically for production workers and management.

Finally, just over a quarter (27.4%) of respondents have three or more employee groups. This is most commonly a feature of public sector organisations. Exactly half (50%) of respondents in this sector report three or more separate sets of arrangements.

This is one of three articles drawing on the study. Others in the series analyse the ways in which respondents organise and administer annual leave arrangements, and provision for sabbaticals and other long-term leave.

 

Benchmarks for paid holidays

We asked our panellists to state the basic holiday entitlement for a full-time employee with one year's service, excluding bank and public holidays, for up to three groups of employees. Their responses ranged from 12 days at one extreme of the spectrum to 60 days at the other. The longer entitlements tended to be those enjoyed by academic staff in education. The range of paid annual leave entitlements is set out in table 1.

It is worth noting that a paid annual leave entitlement of 12 days, plus eight paid bank and public holidays, is exactly equal to the minimum legal requirement at the time of the survey.

Across all 255 employee groups where figures are available, the mean average entitlement is 24.6 days and the median, or midpoint in the range, is 25. These figures are exactly the same as those found in the last IRS survey of annual leave arrangements in 2005 (http://hrcentre.uk.brightmine.com/ViewArticle.asp?id=49828).

As in 2005, by far the most common entitlement, enjoyed by 81 employee groups, is to 25 days' paid annual leave, with a further 47 groups having an entitlement to 20 days. Half of all respondents in the middle of our range (the interquartile range) offer holiday entitlements of between 22 and 27 days.

Table 1: Paid annual leave entitlement

No. of days	No. of employee groups
12	1
14	1
16	2
18	1
19	1
20	47
21	8
22	18
23	17
24	10
25	81
26	3
27	17
27.5	1
28	14
28.5	2
29	2
30	15
30.5	1
31	1
32.5	1
33	1
34	2
35	4
37	2
47	1
60	1

n = 255 employee groups

Source: IRS

Benchmarks by sector

Workers in different industries have traditionally had varying holiday entitlements. Our own analysis shows how those in the hotels and catering sector and in retail and wholesale tend to have the shortest paid holidays, while those in the public sector do best.

Table 2 shows mean and median holiday entitlements for all sectors where we have data on five or more groups of employees. It also shows information on the minimum and maximum lengths of holiday collected in our survey.

Such data can be used by employers to compare their own policies with those of similar organisations. However, the figures should be treated with caution, particularly where sample sizes are small.

IRS normally uses medians rather than means because this reduces the impact of one or two exceptional results at either end of the spectrum. But the table shows that public sector workers tend to have the longest holidays even when the effect of extended breaks in the education sector are removed from the equation.

Table 2: Basic paid holiday allowances by sector

		No. of days
Sector	No. of employee groups	Mean	Median	Minimum	Maximum
Agriculture and forestry	6	23	24	20	25
Chemicals and pharmaceuticals	9	22.1	20	20	27
Construction	2	-	-	20	25
Electricity, gas and water	2	-	-	25	30
Engineering and metals	6	27.7	25	25	37
Financial services	23	24	25	16	30
Food, drink and tobacco	23	24	25	16	31
General manufacturing	24	24.9	25	21	33
General services	34	21.8	25	14	32.5
Hotels and catering	7	21.1	21	12	25
Not for profit	36	25.3	25	16	35
Paper and printing	6	23.2	24.5	16	30
Public services	38	27.5	27.5	16	60
Retail and wholesale	19	21.9	22	16	28
Textiles	1	-	-	25	25
Transport and communications	14	22.1	22	16	34

 

Bank holidays: paid or unpaid?

There is currently no legal entitlement to paid leave for bank and public holidays, although the Department of Trade and Industry has announced plans to increase statutory entitlements for full-time employees from 20 to 28 days to provide for the equivalent paid time off.

For most employees, the right to paid bank and public holidays^{1, 2} is therefore a matter for their employment contract or custom and practice arrangements.

Organisations on the IRS survey panel overwhelmingly offer paid time off for bank and public holidays in addition to basic annual leave entitlement. Among the 260 (261 earlier?) employee groups for which data were collected:

• 243 groups (93.5%) receive bank holidays as paid leave in addition to basic holiday entitlement;
• 17 groups (6.5%) do not receive bank holidays as paid time off.

Of these 17 groups, few appear to enjoy particularly lengthy basic annual leave entitlement. They include, for example: 40,000 retail staff at Mitchells and Butlers (which operates managed pubs, bars and restaurants) who have 20 days' annual leave; and 230 care staff at United Health, also on 20 days. At the other end of the spectrum, however, 1,700 employees covered by a union recognition agreement get 37 days' paid leave without bank holidays (ie they don't get bank holidays, or they are not included in this figure?) , while 1,000 staff in management, admin. and technical grades get 29 days but have bank holidays added to these.

Government plans to increase entitlements

The Work and Families Act 2006 gives ministers the power to determine the amount of leave to which workers are entitled.

Following initial consultation in which the government set out its intention in principle to raise the statutory paid leave entitlement from 20 to 28 days (for a full-time worker), employment minister Jim Fitzpatrick explained in January 2007 how the government intends to do this.

The proposals set out in a second stage consultation document¹ are that:

• statutory paid leave entitlement will increase from four weeks (20 days for a full-time worker) to 4.8 weeks (24 days) on 1 October 2007;
• statutory paid leave entitlement will increase from 4.8 weeks (24 days) to 5.6 weeks (28 days) on 1 October 2008;
• the 5.6 weeks legal entitlement will be capped at 28 days, so that workers employed for six days a week would not be entitled to 5.6 x 6 (33.6 days);
• there will be provision for leave entitlement to be carried over from one year to the next, subject to the agreement of both employer and worker;
• there will be no provision to pay a worker in lieu of statutory paid leave.

There are other measures in the second-stage consultation document that may affect how employers manage working time overall.

For example, while the current four weeks' leave is treated as excluded time and cannot be used in calculating the average number of hours worked, this will not apply to the additional days now being added.

The Department of Trade and Industry calculates that up to six million workers may benefit from its proposals, and it would mostly affect women, part-time workers, low-paid workers and those from ethnic minority communities.

It estimates that the cost of the proposals will be around £4 billion a year, or 0.4% of the wages bill. It also argues that the proposals will allow "reputable" companies to compete on a more level playing field with those that give only the minimum holiday entitlement possible.

Consultation closes on 13 April 2007.

Employers' plans to increase entitlements

The government's proposals would directly affect only six of the 255 employee groups in the IRS survey for which annual leave data is available. All of these would need to raise holiday entitlements to comply with the law.

But if no further action were taken, a further 47 groups would then enjoy only the statutory minimum holiday entitlement. As many employers offer more than the minimum in order to be seen as an employer of choice, this may prompt some to review their arrangements.

The IRS survey shows that, at present, just 19 organisations (14.1%) plan to change their policies on holidays to take account of an increase in statutory entitlements. This number may rise as the implementation date approaches and competitors make the first move.

 

1. Bank and Public Holidays in England, Wales and Northern Ireland www.dti.gov.uk/employment/bank-public-holidays/index.html

2. Statutory Bank Holidays for Scotland, www.scotland.gov.uk/Publications/2005/01/bankholidays

3. DTI Employment Matters: Holidays, www.dti.gov.uk/employment/holidays/index.html.

 

Additional resources onXpertHR

Employment Law Reference Manual: Holiday and Holiday Pay

http://hrcentre.uk.brightmine.com/reference.asp?TOPID=2&SLID=12&ChapID=4&SecID=408

Model Policy: Holiday and Holiday Pay

http://hrcentre.uk.brightmine.com/ViewArticle.asp?id=16134