Annual leave: 2015 XpertHR survey of employer practice
Author: Noelle Murphy
This XpertHR survey provides detail of annual leave arrangements among 489 employers, representing 949 employee groups and more than 425,000 employees.
Basic annual leave entitlement
Among the 489 employers in the 2015 XpertHR annual leave survey:
This summary report covers key findings from our latest survey on annual leave entitlement, including employers' changes to annual leave provision.
- employer practice with regard to unused holiday entitlement;
- employers' approaches to extra public holidays granted by the Government; and
- additional and other holiday entitlement.
- 39% have the same annual leave arrangements for all employees;
- 35% have two groups with different entitlements;
- 14% have three groups with different entitlements; and
- the remaining 12% of employers have more than three variations.
Among these employers, the median basic holiday entitlement for full-time employees (excluding bank/public holidays) with one year's service is 25. This median is the same as those recorded in our 2013 and 2011 research.
Other key facts about basic annual leave entitlement for 2015 include:
- basic holiday entitlement at the lower quartile is 23 days (ie at least a quarter of the employee groups are entitled to 23 or fewer days basic annual leave);
- the upper quartile figure is 28 (ie a quarter of the employee groups are entitled to 28 days of basic annual leave or more);
- the upper quartile shows an increase of one day's annual leave over our findings in 2013; and
- the average amount of annual leave on offer among our respondents stands at 25.8 days.
The minimum amount of annual leave (excluding bank/public holidays) stands at 20 days and the maximum at 82 days - among staff working in academia. For a full breakdown by sector, see XpertHR Benchmarking.
The legal position
Holiday pay and overtime: In a recent case, the Employment Appeal Tribunal held that a week's pay when calculating holiday pay must include overtime that employees are required to work, even if the employer is not contractually obliged to offer a minimum number of overtime hours. See Policies and documents > Holiday policy for further details.
Sickness that occurs during or just before a period of holiday: While there is currently no legislation governing the relationship between paid holiday entitlement and sickness absence, recent decisions from the European Court of Justice have left the law around paid annual leave and sickness absence in an unsatisfactory state. For guidance, use How to > How to deal effectively with sickness that occurs during or just before a period of holiday.
Inclusion of bank and public holidays
More than nine in 10 (93%) of the employee groups included in our research receive pay for bank/public holidays in addition to their basic holiday entitlement. Where it is not paid, two main options exist:
- if the workplace is closed, employees are required to take it as leave (51%); or
- if the workplace is open, employees must request holiday as normal (46%).
XpertHR Benchmarking also includes further details on service-related entitlement and the number of years' service that is required to get additional leave, as well as arrangements among organisations where employees can buy back unused holiday entitlement through payment in lieu.
Calculating holiday pay
There are three main formulas used to calculate holiday pay for each employee group. The table below lists them, along with the number of employee groups to which they refer.
Table 1: Formula used to calculate holiday for employee groups
|Formula||% of employee groups (no. of employee groups)|
|1/260th of basic salary for each day of annual leave||62.2% (598)|
|1/365th of basic salary for each day of annual leave||25.1% (241)|
|1/220th of basic leave for each day of annual leave||2.2% (21)|
|n = 962.
Other examples include:
- Holiday pay is calculated at either 1/365 or 1/260 of basic salary for each day of annual leave, depending on whether or not the employee is a shift worker.
- Employees have their salary calculated in hours. Holidays are calculated by multiplying hourly rate by number of hours normally worked on that day.
- Complex calculation based on 14 payments in a year and taking into account averages of gross earnings.
- Calculated at 1/365 of salary, plus the average amount of overtime (split into weeks) worked in the previous year. There are also additional top-ups if they have worked on a bank holiday, so holiday pay could be up to triple-time (depending on shiftwork and bank holiday) as well as a day off in lieu.
- Each day is paid at 1/365 of the previous year's P60 figure, less any statutory sick/maternity/paternity payments. If this is less than basic, then it is made up to match this level.
This XpertHR webinar provides practical guidance on calculating employees' holiday pay and rounds up the key cases of which employers need to be aware.
Changes to holiday entitlement
Among the 15% of employee groups that have seen changes made to basic holiday entitlement in the past three years, the majority (71%) have seen their holiday entitlement increase. One in six (15%) have had their annual leave entitlement harmonised with other employee groups throughout the organisation. More than one in 10 (11%) have had buying and selling annual leave introduced and around one in 10 (9%) have had changes made as a result of developments in legislation regarding accrual of holiday during sickness absence.
Overwhelmingly, the main reason for the changes centre on employers' desire to be competitive and reflect good practice. The second most popular reason is to harmonise terms and conditions.
Looking forward, around one in five (17%) employers anticipate having to make changes to holiday entitlement in the future. Besides doing so to remain competitive (74%), almost a quarter (24%) are planning to introduce a flexible benefit scheme, and one in five are planning to harmonise terms and conditions among employees.
This report is based on original research carried out online in October 2014. Responses were received from 489 organisations, employing more than 425,000 people. The breakdown by economic sector is as follows:
- 339 (69%) are in private-sector services;
- 110 (22%) are in manufacturing and production; and
- 40 (9%) are in the public sector.
Broken down by workforce size, the respondent organisations comprise:
- 278 (57%) with between one and 249 employees;
- 136 (28%) employing between 250 and 999; and
- 75 (15%) with 1,000 employees or more.
What should I do now?
- Use Good practice manual: Annual leave to increase employee engagement and improve business efficacy by effectively managing your annual leave process.
- Read How to > How to deal effectively with sickness that occurs during or just before a period of holiday for detailed, practical guidance in dealing with this situation.
- Compare your organisation's holiday entitlement against others using XpertHR Benchmarking.
- For more information on your legal obligations surrounding annual leave and holiday pay, see Audio and video > Webinar: Holiday pay, overtime and commission - making sense of annual leave.