Holiday sounds simple. Book it, take it, done. Except it isn’t, and I see the same handful of mistakes crop up with clients every single year.
Get holiday wrong and it isn’t just an admin headache. It’s a financial liability sitting on your books, whether you’ve noticed it or not. So here are five things about holiday entitlement that catch people out, plus what to do about it.
1. Bank holidays don’t have to be separate
It’s a common myth that bank holidays sit on top of annual leave. They don’t have to. The statutory minimum is 5.6 weeks, which works out at 28 days for a full-time employee, and that 28 days already includes bank holidays. You can offer more than that. But you can’t offer less.
Where people trip up is when they separate the two out and then panic about part-time calculations. Part-timers are entitled to a pro-rata share of bank holidays too, whether or not they actually work a Monday. Someone working four days a week gets four-fifths of the bank holiday entitlement, Monday or no Monday.
Easiest fix? Add both entitlements together first, then pro-rata the whole lot. One calculation, not two, and far less room to get it wrong.
2. You can tell them when to take it
Yes, really. The Employment Rights Act gives you the right to mandate holiday, as long as you give notice equal to double the length of leave you’re asking for. Want them to take a week off? Two weeks’ notice. Two days? Four days’ notice.
You can also refuse a holiday request. I’ve got a client who kept complaining that employees put in holiday at the worst possible times, and my answer was simple: why are you agreeing to it? Refuse it.
A decent holiday policy makes this so much easier. Set blackout dates for your busiest periods. Better still, if there’s a quiet stretch every year, say a January shutdown, you can require your team to take leave then and even write it into the contract. Most employers don’t realise this, so everyone ends up scrambling to use their holiday in March, right when the business can least afford it. It doesn’t have to be that way.
3. Holiday keeps accruing when someone’s off sick
Annual leave doesn’t pause for sickness, family leave, or anything else. Someone off sick for a year is still building up holiday, and they can book and take annual leave during that time too.
It is capped eventually, so it doesn’t build up forever. But while it’s accruing, it’s a real financial liability. And if you end up dismissing someone for long-term sickness, you’ll need to pay out whatever holiday they’ve built up but not taken.
4. Holiday isn’t just basic pay
If someone regularly earns commission, bonus or overtime, that can affect how their holiday pay is calculated. It’s not always just their standard salary. This is one of those areas that gets complicated fast, and it’s an easy one to get wrong without realising.
5. “Use it or lose it” isn’t really a thing
I hear this a lot: if they don’t book it, they lose it. Not quite. This is a statutory entitlement, so it carries over where someone’s been on long-term sick or family leave, or simply hasn’t had a genuine opportunity to take it.
It’s less about what not to do and more about how to manage holiday entitlement
The bigger point here is that holiday needs managing proactively. If someone left tomorrow, you’d have to pay out every day of accrued but untaken leave. Better to see that coming than get caught out by it.
Holiday isn’t paperwork, it’s money. Get your contract terms and your holiday policy sorted, and you’re managing that liability instead of it managing you.
Prevention beats panic every time.
If your holiday policy is more “good enough” than watertight, that’s exactly what a Mayday HR MOT sorts out.
Get in touch and let me know what you’re dealing with so I can help.