Annual leave is an important element of an employment agreement – for both the employee and employer, so you need to make sure you comply with UK employment law and provide an attractive offer to employees that is also fair to your business. One question that we’ve heard asked many times is whether bank holidays are included in annual leave? While UK law guarantees 5.6 weeks of paid holiday per year (equivalent to 28 days for those working five days a week), the inclusion of bank holidays often creates confusion for both employers and employees.
The eight bank holidays in England and Wales can be included in this statutory minimum, depending on how employment contracts are worded. A contract stating “28 days of holiday” might include bank holidays, however, one specifying “20 days holiday plus bank holidays” means these days are additional to annual leave.
Managing a team provides plenty of challenges and holidays are always an emotive topic. A good manager will want to make sure each individual takes time off and is relaxed and rested, but when you’re running a small business it’s hard to juggle this with all the work that often falls back to the founder, so you need to understand your responsibilities when writing your employment contract.
Understanding annual leave entitlement in the UK
There’s legislation to help protect employees and ensure they are protected from stressful deamnds; the Working Time Regulations 1998 established the foundation of holiday entitlement for UK workers. Let’s explore the specifics of annual leave and understand how bank holidays affect your overall holiday allowance.
The statutory minimum of 5.6 weeks
From day one of employment, all workers in the UK have a legal right to 5.6 weeks of paid holiday annually. For those working a standard five-day week, this translates to 28 days of paid leave. Although, if you work six days per week, your statutory entitlement remains capped at 28 days.
Part-time workers receive the same 5.6 weeks proportional to their working hours. For instance, if you work three days weekly, you’re entitled to 16.8 days of annual leave. This pro-rata calculation ensures fair treatment regardless of working patterns.
How bank holidays fit in
The 28-day statutory minimum is split between 20 days of ‘Euro leave’ (stemming from European Working Time Directive) and eight days of ‘UK leave’. These eight additional days reflect the standard bank holidays in England and Wales, although employers aren’t required to give these specific days as leave.
Bank holidays in the UK vary by region:
- England and Wales: 8 days
- Scotland: 9 days
- Northern Ireland: 10 days
What does ’28 days holiday include bank holidays’ mean?
When your contract states “28 days holiday including bank holidays” this means bank holidays are part of the employee’s statutory minimum entitlement. Alternatively, if the contract specifies “20 days holiday plus bank holidays,” then bank holidays are additional to the employee’s base holiday allowance.
As an employer, you can include bank holidays within your statutory minimum or provide them as extra paid leave or require an employee to work on bank holidays (unless the contract states otherwise) or ask the employee to take specific days as leave, provided proper notice is given.
For workplace closures during bank holidays, employers can require staff to take these days from their annual leave entitlement. Nevertheless, if bank holidays aren’t mentioned in an employment contract, it’s advisable to discuss and agree upon arrangements between the employer and employee.
Remember that ‘normal pay’ during holiday includes considerations for commission, overtime, bonuses, and other allowances. This ensures workers receive their regular earnings while taking annual leave, maintaining financial stability during rest periods.
Different approaches to bank holidays in employment contracts
Employment contracts in the UK handle bank holidays differently, creating distinct approaches to holiday entitlement. Let’s examine these variations and their implications for both employers and employees.
Including bank holidays in annual leave
Many employers opt to include bank holidays within the statutory 28-day minimum leave allowance. Under this arrangement, workers must use their annual leave allocation for bank holiday closures. This approach requires clear contract wording, as ambiguous terms might lead to misunderstandings about total holiday entitlement.
Some contracts specify “20 days’ holiday plus bank holidays,” yet employers must ensure the total meets the statutory minimum of 28 days for full-time staff. Notably, employers cannot negotiate below this minimum requirement, except through specific agreements to carry forward up to eight days into the following leave year.
Providing bank holidays as additional leave
Some employers choose to grant bank holidays as extra paid leave, beyond the statutory minimum. This approach means workers receive their full annual leave allowance plus paid time off for bank holidays. The contract should explicitly state this arrangement to avoid confusion.
Part-time workers and bank holiday entitlement
Part-time workers deserve special consideration regarding bank holiday arrangements. The law mandates equal treatment between part-time and full-time staff. To ensure fairness, many employers use a pro-rata calculation for part-time workers’ bank holiday entitlement.
Consider this practical example for an employee in England (which has 8 bank holidays per year, so at 8 hours per day, this is equal to 64hours): For a part-time employee working 22.5 hours weekly (compared to a 40-hour full-time week), their bank holiday entitlement would be calculated as: 22.5 ÷ 40 × 64 = 36 hours of paid bank holiday per year.
Some key considerations for part-time staff:
- They must receive proportional bank holiday entitlement, even if holidays fall on non-working days
- Employers should calculate entitlement based on hours worked rather than days
- Staff working on bank holidays might receive enhanced pay or time off in lieu, subject to contract terms
The fairest approach often involves adding bank holidays into part-time workers’ total annual leave allowance, allowing them to take these days at convenient times throughout the year. This method ensures equitable treatment across all working patterns.
How to clearly word your holiday policy
Clear communication about holiday policies prevents misunderstandings and workplace disputes. A well-crafted policy helps both employers and staff understand their rights and responsibilities regarding annual leave.
Examples of clear contract wording
The most effective holiday policies use straightforward language to address key points. Your policy should specify:
- The total number of holiday days
- Whether bank holidays are included or additional
- The procedure for requesting time off
- Rules about carrying over unused leave
For example, instead of vague statements, use precise wording such as “30 days annual leave plus 10.5 days public holidays”. Additionally, specify the leave year clearly – “The leave year runs from January to December inclusive”.
Common misunderstandings to avoid
Many workplace disputes arise from unclear holiday policies. To prevent confusion:
- Holiday Request Process: Clearly state that managers must approve all leave in advance. Specify the booking procedure – “Complete your leave request through the holiday portal” or “Submit written requests to your line manager”.
- Bank Holiday Arrangements: Address how bank holidays affect leave entitlement. State explicitly if they’re “included within” or “additional to” the standard allowance.
- Part-time Workers: Explain that holiday entitlement, including bank holidays, is calculated proportionally based on hours worked.
Some employers use a first-come, first-served basis for holiday requests. Accordingly, make this clear in your policy. Similarly, outline any restrictions on maximum consecutive leave days – “You can ask to take a maximum of two weeks’ holiday at any one time”.
Remember to address special circumstances:
- Religious holidays and accommodations
- Sickness during holiday periods
- Rules about carrying over unused leave
- Holiday entitlement during notice periods
Your policy should also clarify that employees must not make travel arrangements until receiving written confirmation of approved leave. This prevents potential conflicts and financial losses.
Managing bank holidays in special circumstances
Special circumstances around bank holidays require careful consideration from both employers and employees. From businesses that operate throughout public holidays to managing unexpected changes in the holiday calendar, here’s what you need to know about handling these unique situations.
When your business operates on bank holidays
Many industries, particularly hospitality and retail, continue operations during bank holidays. In these cases, employers must clearly communicate expectations about working on these days. Staff cannot typically refuse to work on bank holidays unless their contract specifically grants them this right.
Businesses operating on bank holidays should:
- Establish clear policies about holiday pay rates
- Consider staff morale when scheduling work
- Provide alternative days off when employees work on bank holidays
- Ensure fair rotation of bank holiday shifts among staff
Handling extra bank holidays
Occasionally, the government announces additional bank holidays, like the coronation bank holiday on 8 May 2023. The approach to these extra days depends largely on contract wording. If a contract mentions “all bank and public holidays,” employers must grant the extra day as leave.
Before deciding how to handle additional bank holidays, consider previous approaches to special bank holidays, staff expectations based on past practises, impact on your business operations, and employee morale and market standards.
Bank holidays that fall on non-working days
When bank holidays coincide with non-working days, specific rules apply. For part-time staff who don’t work Mondays (where most bank holidays fall), employers cannot require them to use that day as part of their holiday entitlement.
Consider Ali and Jo’s case: Both work three days weekly, but Ali works Mondays while Jo doesn’t. Though both receive 16.8 days’ holiday annually, Ali uses more leave for bank holidays than Jo. To ensure fairness, many employers provide a pro-rated bank holiday entitlement, regardless of working patterns.
Substitute days apply when bank holidays fall on weekends. These typically occur on the following Monday. Moreover, paid days off for bank holidays continue to accumulate during various types of leave, including maternity, paternity, and sick leave.
Annual leave and bank holidays
Understanding bank holidays and annual leave doesn’t need to be complicated. After exploring the intricacies of UK holiday entitlement, we can see that the key lies in careful contract interpretation and clear workplace policies.
Most employers choose either to include bank holidays within the statutory 28 days or offer them as additional paid leave. Though both approaches are legal, what matters is transparent communication through well-written contracts and policies.
Part-time workers deserve equal treatment, with pro-rata calculations ensuring fair holiday allocation regardless of working patterns. Similarly, special circumstances like extra bank holidays or weekend public holidays require thoughtful handling based on contract terms and established practises.
Remember that while the law sets minimum requirements, many employers offer more generous terms. Whether you’re an employer or employee, checking your contract’s specific wording about bank holidays will help avoid misunderstandings and ensure everyone knows where they stand.
FAQs
Q1. Are bank holidays automatically included in annual leave in the UK? Bank holidays are not automatically included in annual leave. Employers can choose to include them within the statutory 28 days of annual leave or offer them as additional paid leave. The specific arrangement should be clearly stated in your employment contract.
Q2. How is holiday entitlement calculated for part-time workers in the UK? Part-time workers receive holiday entitlement on a pro-rata basis. For example, if you work 22.5 hours per week compared to a 40-hour full-time week, your bank holiday entitlement would be calculated as: 22.5 ÷ 40 × 64 = 36 hours of paid bank holiday per year.
Q3. Can employers require staff to work on bank holidays? Yes, employers can require staff to work on bank holidays unless the employment contract specifically states otherwise. However, many employers offer alternative arrangements such as enhanced pay rates or time off in lieu for those working on bank holidays.
Q4. How are extra bank holidays handled in the UK? The handling of extra bank holidays, such as those for special occasions, depends on the wording in employment contracts. If a contract mentions “all bank and public holidays,” employers must typically grant the extra day as leave. However, specific arrangements may vary between employers.
Q5. What happens when a bank holiday falls on a non-working day? When a bank holiday falls on a non-working day, such as a weekend, a substitute day is usually provided on the following Monday. For part-time workers who don’t typically work on the day when a bank holiday falls, many employers provide a pro-rated bank holiday entitlement to ensure fairness across all working patterns.
