Managing Annual Leave

Managing employee holidays correctly is a huge part of running a business, and failure to do so can cause major problems and complications. Despite its importance, mismanagement of annual leave is extremely common within a lot of companies. So, where do employers tend to go wrong?

It happens all too often – employees build up their annual leave allowance to take at the very end of the leave year. This can cause a multitude of problems for employers, especially if their business has a very busy period where they need all hands-on deck. To avoid this holiday panic, businesses should aim to encourage staff to spread out their annual leave across the year. As well as avoiding the problem of an excessive amount of leave, this will also do wonders to increase employees’ health and motivation which will in turn have positive repercussions on the business.

Many employers seem to think that their annual leave problems can be solved simply by offering their employees extra money in exchange for their holidays. Whilst this may seem like a good idea to some, it will do nothing to boost staff motivation or wellbeing. Furthermore, it is illegal to offer employees payment in lieu of their minimum statutory annual leave entitlement, which is currently 5.6 weeks in the UK.

If an employee has not taken their full annual leave before the end of the year, many employers believe that the easiest solution is to allow them to carry over into the next leave year. This is a lot easier said than done. Under EU law, employers are unable to carry over the first four weeks of their staff’s statutory annual leave, unless the employee was not able to use it due to sickness absence. After these weeks employers should tread carefully and Employment contracts should be referred to as there may have been procedures laid out regarding the carryover of annual leave.

Another major problem that companies face is that too many employees take their holidays at the same time. Christmas and the summer holidays are the times that are most likely to be affected by this problem. Employers sometimes find it difficult to reject staff holiday requests, but unless their contract states otherwise, they are not obliged to approve annual leave at a specific time. Businesses should set out a clear holiday policy that states how annual leave requests are processed; and employers should not feel bad about turning down holiday requests at a time that would cause problems.

And with holidays comes calculating pay for annual leave, which has proved to be a problem for employers over the years. It is no longer acceptable to work out holiday pay depending solely on an employee’s basic pay. It is now the law that holiday pay should comprise other expenses, for example, overtime, commission and travel costs to name a few. If a business fails to correctly calculate their employees’ holiday pay it could end up being a very expensive mistake.

Here at PrivilegeHR, we understand that managing employees’ annual leave can be tricky and time consuming, which is why we have introduced the PrivilegeHR system. Designed to help employers manage their staff and business effectively.

To find out more information visit our website