Do I have to pay staff for new bank holidays?

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In 2022, there will be a new bank holiday added to the calendar. The Queen’s Platinum Jubilee will take place in June, granting another bank holiday for (some!) workers.

But before we all cheers to that, company owners may have some questions regarding new bank holidays and their staff. Can you remain open for business? Do businesses need to pay for staff on new bank holidays? Is it counted as part of statutory allowance, or is it classed as unpaid leave?

There are a lot of questions already being asked, and you’ll get clear answers right here.

Do companies have to pay for extra bank holidays?

You may or may not have to pay staff for extra bank holidays. The answer depends on what is written in their employment contracts, and more specifically, in the section discussing their statutory holiday allowance entitlements. If you have simply stated that the employee can have 20 days of paid leave plus bank holidays, then you will be obligated to pay.

Find out more below.

What is the statutory holiday allowance?

The UK’s statutory holiday allowance is a minimum of 5.6 weeks of paid holiday leave each year. If the worker is not a full-time staff member, then this amount is made proportional to the number of hours worked. Most employers will provide 20 days of holiday each year and an additional eight days that are usually fixed as bank holidays.

However, note that there is no automatic legal right to a paid day off on a bank holiday. It is possible for companies to offer a different eight days off if they prefer, but this is quite rare as most people prefer to be off on bank holidays when their friends and family are also off.

Contractual wording is key

How the employment contract is worded will decide if you need to pay your staff for the extra bank holiday or not. If the contract states that the employee has the right to 20 days of paid leave and an additional eight days of paid leave on bank holidays, the employer does not have to pay the staff member for the additional bank holiday. If your staff want to have paid leave on the extra bank holiday, they could ask to take it from their 20 allotted holiday days instead.

But if the contract states the employer is entitled to 20 days of paid leave and bank holidays without actually stating how many bank holidays, the company will have to pay the staff member for the new bank holiday as well. The lack of specificity means the employer has agreed to pay for all bank holidays.

If you’re reading this in good time, you may want to try and re-negotiate and re-issue new contracts, so you are not obligated to pay for additional bank holidays. However, there may be times when you would rather pay staff for the extra bank holiday.

Why you might want to pay

Running a company is not just about churning out impressive profits. Creating a harmonious working environment with high staff morale is essential. It can even contribute to increased productivity and reduced staff turnover (which can be expensive!).

Some bosses may prefer to reward staff for their hard work by giving them paid leave on the additional bank holiday when they’re not contractually obligated to do so. This could benefit the company’s bottom line and staff retention rates.

Reasons not to pay for the additional holiday

There are many reasons why you wouldn’t want to pay for an additional bank holiday when you don’t have to. One of them may be because you’re a business that could thrive on a bank holiday, such as a restaurant in a popular tourist area.

You may want to have a high volume of staff working on that day to cater to increased demand. If your business will be more profitable on this day, you could reward staff for their work in other ways.

Alternatively, your business could have struggled due to recent events, not least Brexit and the coronavirus pandemic. If your business has had a hard time of late, you probably wouldn’t want to increase expenditure unnecessarily.

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