The trade unions have for some time campaigned for bank and public holidays to be additional to the statutory minimum entitlement and, as part of the 'Warwick Agreement' with the unions prior to the last election, the Labour Party agreed to include a commitment to make paid leave for bank and public holidays additional to the statutory entitlement.
Government's proposals
The DTI has now issued a consultation document about this proposal. Unacceptably, in what is supposed to be an era of better regulation, the DTI admits that the proposal will have a disproportionate impact on small businesses and will reduce the competitive advantage enjoyed by some businesses.
As yet, however, it has no adequate data on what will be the costs and benefits of the proposal. Nonetheless, it feels that the proposal will improve work-life balance (self evidently) and reduce stress (less evidently).
The proposal is to add 1.6 weeks (or a maximum of 8 days) to the current statutory entitlement of four weeks' paid leave. It is not proposed that those additional days will have to be taken on bank or public holidays.
The additional entitlement will be phased in, with the statutory entitlement increasing from 4 weeks to 4.8 weeks (i.e. 24 days for those on a five-day week) on 1 October 2007. The consultation document seeks views on how and when the remaining four days should be phased in.
Impact for members
Whilst it might appear that the proposal will not impact on those who already provide holiday equivalent to or in excess of the proposed new maximum, that is not necessarily so. Currently, whilst normally there can be no 'carry over' of the statutory minimum holiday entitlement, the parties are free to agree that holiday in excess of the statutory minimum can be carried over to the next or a later holiday year.
Again, whilst none of the statutory minimum holiday entitlement can be 'bought out' or exchanged for other benefits, the parties are free to agree such arrangements for contractual holiday entitlement in excess of the minimum. Both of these freedoms would disappear for the eight additional days, if the Government simply applies the existing statutory regime to those days. They would, however, remain for any extra contractual days.
Option to pay in lieu
The consultation document asks whether there should be an option to give a payment in lieu of taking leave and/or to carry over some or all of the additional days. It also asks which flexibility would be the most helpful. In asking these questions, it rather pointedly says that, while flexibility may help businesses and staff manage the additional holiday, this would increase administrative burdens on business.
We assume that this is because there would be two regimes applying to different parts of the statutory leave entitlement. This observation ignores the fact that most employers are already used to dealing with two separate legal regimes: the statutory regime applying to the first 20 days and the contractual regime applying to the remaining days. Unfortunately, there is a danger that we might finish up with three regimes applying to holiday entitlement: one for the first 20 days; one for the next eight and one for the remaining days.
Despite this danger, our preliminary view is that the parties should have the same freedoms in respect of the proposed additional statutory days as they currently enjoy in relation to additional contractual days; hence they could be carried over or exchanged for money or other benefits.