If your holiday year runs from April to March then your employees may be entitled to an extra day’s holiday for 2023/24 and there may be a shortfall in their statutory entitlement for 2024/25 depending on how their contracts are worded.
This conundrum arises every few years when Easter falls wholly in April one year and in March (and April) the following. For example, in 2023 Good Friday fell on 7 April but in 2024 it falls on 29 March. This situation results in one April to March holiday year having more than the usual 8 Bank and Public Holidays and there being less in the following holiday year. The question then arises as to whether employees should be paid for the additional public holiday and how the shortfall in the following year should be treated.
Background
There are always eight Bank and Public holidays in England and Wales every year:
- New Year’s Day
- Good Friday
- Easter Monday
- May Bank Holiday
- Spring Bank Holiday
- August Bank Holiday
- Christmas Day
- Boxing Day
Bank Holidays originated in 1871 and are typically days that banks and other institutions/offices are closed. The number of Bank Holidays in a year is covered by the 1971 Banking and Financial Dealings Act and any extra ones (such as for the King’s coronation) are determined by Royal proclamation. Bank Holidays cover all of the above days except Good Friday and Christmas Day which are designated as “public” holidays. The terms bank and public holidays tend to be used interchangeably, but legally have different meanings so that should be borne in mind when drafting employment contracts.
What is the minimum entitlement to annual leave?
The Working Time Regulations 1998 (“the Regulations”) provide for a minimum entitlement of 5.6 weeks’ (or 28 days) paid annual leave each year for full-time employees. There is no reference to time off for bank or public holidays under the Regulations which by extension means that there is no right to paid time off on these days. Whether a worker is entitled to paid time off for bank and public holidays is therefore a matter of contract.
Contract of employment
Employers should check contracts (or the organisation’s holiday policy) to see when the holiday year runs from and to. If it is April to March, then the next step is to check what the contract says about what paid leave the employee is entitled to. We have set out below contractual wording that may be problematic:
20 days plus (the usual) 8 bank and public holidays – in this situation employees will not be entitled to time off or to be paid for the second Good Friday that falls in the 2023/24 leave year. In addition, for the leave year 2024/25 there will be one less public holiday (as Easter will fall in April in 2025) and so the employee will only have 27 days leave, which is less than the statutory minimum.
20 days plus the following bank and public holidays – New Year’s Day, Good Friday, Easter Monday, May Day, Spring Bank Holiday, Summer Bank Holiday, Christmas Day and Boxing Day – here employees will be entitled to be paid for the extra Good Friday in the 2023/24 leave year but there will still be a shortfall of one day in the 2024/25 leave year, as there is no Good Friday.
28 days inclusive of bank and public holidays – in this situation employees will receive their statutory minimum entitlement in both the 2023/24 and 2024/25 leave years, however, they will not be entitled to be paid for the additional Good Friday which falls in March 2024, unless the employer chooses to do so, as by this point, they will probably have taken their full 28 day entitlement.
20 days plus bank and public holidays – here employees should be paid for the additional Good Friday, as there is no limit on the number of bank and public holidays. The fact that an employee is paid for an extra public holiday in one leave year does not automatically entitle an employer to offset it against any shortfall arising in the following leave year.
Consequences
Failure to pay for additional public holidays could lead to an unlawful deduction from wages claim and/or a claim for breach of the Regulations. Employers should also ensure they are calculating holiday pay correctly – please see our Spring Newsletter for further information [LINK].
What about part-time employees?
Holiday entitlement for part-time employees should be calculated by pro-rating the entitlement of a full-time employee (including bank and public holidays), as part-time employees have the right not be treated less favourably than full time employees. By way of example, if a full-time employee works 37.5 hours a week and is entitled to 20 days holiday a year plus bank and public holidays, then a part-time employee who works 3 full days a week will be entitled to 16.8 days (or 126 hours) a year. Care should therefore be taken to ensure that part-time employees are not treated differently that their full-time counterparts where there is an extra public holiday in a leave year.
Unless the contract expressly says a part-time worker is entitled to paid time off on all or some bank and public holidays, part-time employees will need to book those days off from their annual entitlement to be paid for them.
Further information on holiday entitlement for seasonal and irregular hours employees can be found in our Employment Newsletter March 2024.
Practical steps for employers
One of the ways in which employers can avoid the variable timing of Easter impacting holiday entitlements would be to change employees’ holiday year. For example, switching it to January to December or to make employees carry over the additional entitlement into the following leave year to avoid a consequential shortfall in the next year. However, this would require consultation and agreement from employees if doing so would be a change to their contract.
Alternatively, if employers do not wish to change their leave year, they will need to make sure that employees still receive their minimum statutory entitlement in any holiday year where their contractual entitlement falls short of the statutory minimum. This could be done by providing employees with a permanent increase in their holiday entitlement by a day or more, or by giving them one-off additional leave in any year in which there is a shortfall.
If you would like to discuss these issues further, please contact our Employment team.