As the world reboots after the firm reset of the Pandemic, we have the opportunity to revisit, redefine and reshape how we have done things. 2020 was a strange year, especially for annual leave, as lockdown restrictions changed how we used annual leave and the Government stating leave can be carried over, firmly “kicking the can” down the road, to give us a problem for another day (or year).
How we live and work has been given the opportunity to change, some people may “go back to normal” whilst other consider and embrace the “new way”. Working from home, at scale, has changed how some people view and use annual leave. For instance, some people no longer need a half day on a Friday for a weekend away, as no commute and an early start means you can be at the airport for an evening flight, or be half-way down the motorway on your way to seeing family. Likewise, travel restrictions have made some people more determined than ever to use their annual leave and where possible take extended time. Whilst others have got used to not taking annual leave and combined with the cost of living increases would prefer to be paid for unused holidays.
As our place of work has changed along with understanding for personalised flexibility of when we work, we now need to consider when we don’t work. We will “kick ourselves” if we go back to how we’ve always used annual leave and it will be very lazy of us if we don’t review the annual leave policy. As always, this is complex with many questions needing to be asked and an understanding that doing one thing may impact something else. However, like the creation of working patterns, the creation of personalised annual leave could also distinguish your organisation from others and become a key attraction factor for talent joining your business.
This has been written from a perspective of Customer Contact Operations, and though many of the questions are transferable to other industries, there will be some differences. At some point I would like to compare the differences. So please add any other practices that you have seen work.
The aim of this article is to understand what questions need to be asked to create better annual leave. I’m sure I will have missed a few questions, so please add them to the comments. I’m also certain that my answer may contrast yours, again I’d love to hear your views. The more ideas and diversity of thought the better.
Why 20 days plus Bank Holidays, plus Bank Holidays?
The law on paid leave in the UK, is that a statutory minimum annual leave for full-time employees is 20-days plus Bank Holidays (typically 8 per year). This number seems to have evolved over time with the Labour Government implementing the EU Working Time Regulations (1st October 1998). The EU Working Time Directive was first introduced in November 1993. This was introduced following many years of debate across the UK and Europe. Back in 1938 the Holidays with Pay Act was introduced to give workers the right to one week’s holiday per year.
Across our member base we see organisations who just offer the minimum 20-days plus Bank Holidays, with many increasing this to 25-days plus Bank Holidays. The increase is often gained with tenure, e.g. 5 extra days after 5-years service. There are some examples of further annual leave being earned with longer tenure, e.g. 30 days plus Bank Holidays after 10-years service. We also see some organisations offering paid Wellbeing days (upto 5-days) along with other “special days”, for instance an extra day for your birthday, or day to volunteer doing another activity.
For a full-time worker, the minimum of 20-days plus bank holidays (or an equivalent of contract hours multiplied by 5.6) should definitely be a minimum. 25-days plus Bank Holidays (hours*6.6) should allow for adequate time off spaced throughout the year. The Bank Holidays are spaced throughout the year to provide long-weekends. However, if the organisation is open 7-days per week including Bank Holidays, these natural breaks may not be noticed, even though the time off has been accrued. If annual leave is available, it should be possible for employees to space their leave and take 1-week off per quarter (just an example, I’m not suggesting everyone wants or should have this).
Is it possible to have too much annual leave?
The short answer is Yes. Where skill and capability are at risk due to extended time off, then it is possible to have too much annual leave. There is also a risk of a lack of connection, both social and cultural to the organisation, for instance limited time with line-manager and reduce time collaborating with a team.
That said in some instances extended leave can work well. For instance with seasonal work it is not uncommon for some workers to have large amounts of time off. The last shift of one season and the first shift of the next season may be 4, 5 or 6-months apart. The answer is based on contracted hour employment and not “Gig-economy” hours where there may be extreme time-off between hours worked.
The reality is that there is a cost for paid annual leave and an organisation must balance this with the cost for retaining. In addition having more time off, means you need to have to capability to give this time off without this impacting the customer.
Should there be a (lower) limit to how much leave has to be taken?
I can’t find any reference to a legal minimum that has to be taken each year, the only statutory limit seems to be based on 28-days. However, as we all know, not everyone takes this time each year, sometimes deliberately with the unused time paid and sometimes due to workload and demands.
Maybe there should be a rule introduced to prevent too many continuous weeks of working without annual leave? For instance, a forced week of annual leave must be taken after 26-weeks if only Bank Holidays have been used. In this example, I’ve based this on half a year with no other thought, or science given. I’m encouraging this to be challenged, and would like to hear if anyone has a formal rule for this. I’m sure, individual managers may have a “rule-of-thumb” or personal method for managing this, but I’d like to distinguish this separately.
Should annual leave be forced, if not taken?
This is a difficult one, however answered simply this should be Yes. Following on from the previous question, everyone should have rest from work and there probably is a limit to the number of continuous weeks in work without adequate rest. Time off for Bank Holidays, and even odd days here and there don’t replace the effectiveness of a full week, or more.
However, I must emphasise that forcing annual leave should only be done if certain criteria are met, for example no leave taken and only a few weeks/months left to take it. This should be considered against any rules around paying unused holidays, or if there is a “use or lose-it” policy and any rule around carrying over leave to use in the next year.
In all examples, the key is an open dialogue between individual and organisation, along with suitable tracking to note annual leave taken versus annual leave availability.
Should unpaid options be more readily available?
I’ve used the word “readily” as most organisation will offer extended time off but too often only in exceptional circumstances. Being open about the options around unpaid time off helps to draw out what people are looking for and improve our understanding of how this can be used. I’m sure there are many instances where sickness is taken, when awareness of unpaid leave could have prevented this.
How can wellbeing days, and additional paid days be used effectively?
The concept of these types of days is to offer something different than time-off for annual leave. These aren’t designed to “tag on to” annual leave to provide longer holidays. In the instances of “wellbeing days” these specific days are designed to give people time-off (maybe part or full day) that doesn’t impact their annual leave or their sickness. These paid days aren’t compulsory and unused days aren’t paid, these are just on offer over a set-period and reset at the start of each cycle, e.g. 5-days per 12-months.
For these to be used effectively, they need to be easy to use and administrate. The employee must be able to use these at late notice and have good visibility of days used/unused alongside their annual leave.
Can additional leave be accrued by working additional hours, e.g. Time Off In Lieu (TOIL)?
This needs to be done strategically and part of the people and workforce strategy, managed closely ensuring the right allocation of additional hours and time off. Poor management and poor understanding of this can cause major problems. However, when managed well this can be hugely effective for covering customer demand and supporting colleague flexibility.
As an ad-hoc method this should be used cautiously, and all time needs to be accounted for and agreed formally. Please don’t let a poor experience of this limit your thinking and implementation of TOIL.
Can you buy, or sell annual leave?
This question needs to be carefully answered and followed with an “…if” or “…when”. This is a great concept, which can really help personalise annual leave. However, this can lead to many problems if not carefully understood and managed.
In the example of an organisation offering 25 days plus Bank Holidays, this can work really well, as 5-days could be sold (and still operate within the statutory 20-days minimum). The hope is that not everyone will buy 5-days and not everyone will sell 5-days, therefore cancelling each other out.
What do you do if someone sells their annual leave, but then has high periods of sickness caused by stress or tiredness?
This again comes back to the open dialogue between manager and employee. The opportunity to buy back annual leave (and sell annual leave) should be open at different times throughout the year, to try and prevent this. If it is too late in one yearly cycle, then maybe there should be criteria achieved before someone is allowed to sell annual leave.
What happens if too many people buy additional leave and you don’t have enough leave allocation to give everyone their time off?
If this is a risk, then the upper limit should be known so the maximum amount of additional leave can’t be bought. It should be an easy calculation to work out the limit based on both affordability and practicality. Again, key is the open dialogue between organisation and employees to understand how this works.
Should annual leave be lost if not used?
This is difficult to answer, as there may be circumstances which prevent leave being taken. As mentioned earlier “the key is an open dialogue between individual and organisation, along with suitable tracking to note annual leave taken versus annual leave availability.”
There may be instances where annual leave has not been used by the individual, though they have been given every opportunity to use this. If the dialogue has been open all year and opportunities have not been taken and the individual understands the consequence then I would say the leave is lost, and not paid for, and not carried over. However, this would be in the extreme.
There is a personal responsibility to use annual leave, however if the tracking of annual leave isn’t clear (or doesn’t exist) and managers aren’t regularly talking about this. Then it is unfair to assume that every individual is aware of what they’ve taken and when they need to use it by. Especially, if this individual has been flexible working additional shifts, overtime, or covering difficult shift patterns.
How far in advance should someone be able to book annual leave and plan time off?
There needs to be a limit, as it would be unfair for someone to book Christmas off for the next 40-years – I exaggerate to make the point. However, if someone wants to book 3-weeks off in 3-years time for their honeymoon, then why not? By asking for annual leave in the future, the individual is imagining still working for you when they take their time off, there from a retention point of view this can great.
The individual is looking for “Certainty”. If someone wants time off and they don’t have confirmation, this can create uncertainty. This may mean that the holiday can’t be booked, which then leads to a price rise. This may mean that their partner/friend can’t book holidays either.
Having fixed rules in place, like you can only book holidays up to 12-months in advance feels like an unnecessary restriction, especially if you have leave to be booked.
How late can someone request leave?
On-the-day annual leave should always be an option, however this needs to be closely monitored. A last minute long-weekend away can be a great surprise, so don’t have unnecessary restrictions in place which prevent this, especially when leave is available. Likewise, offering leave on the day can be a great way of using annual leave.
Are “duvet-days” a good idea?
Yes, the concept that sometimes you don’t feel like getting up and want to stay in bed (under the duvet) is a good one. Obviously, there needs to be a limit in this and there should be good tracking in place to ensure there aren’t any patterns (for instance same people on the same days).
I’m aware of different approaches, like 1 duvet day per year, or per quarter. Sometimes these days are in addition to annual leave, other times these are part of annual leave (in other words just late notice annual leave).
How can people amend their annual leave and can people cancel annual leave?
The reality is that changes will be necessary as situations and circumstances change. The more people plan the more changes that will need to be made. However, this is better than leaving everything to the last minute.
There can be a danger that people book up their annual leave in advance, possibly preventing others from using their leave. Then change their minds, resulting in unused annual leave over prime-dates.
It should be possible to cancel annual leave however there should be rules around this. The more advance notice of the cancellation, then the easier this should be. The nearer the time, the more the guidelines and consequences.
Ideally, people will book their main/key annual leave dates in advance, e.g. 9-12+ months notice, therefore cancelling these dates outside of 6-months shouldn’t be a problem. Cancelling leave with 3-months becomes more of an issue, whilst cancelling leave within a week should be the exception.
Should you exceed the annual leave allowance for “special” days/high demand times of the year?
There will be days during the year that are popular, with high employee demand. In the UK it is common for key dates around Christmas and Eid to drive high demand. School holidays also drive a higher demand. There will be other local/regional key dates that may affect your operation, e.g. Pride in Brighton, Glastonbury around Bristol, Burns night in Scotland, etc. Also, 2022 is a FIFA World Cup year, so there may be disruption around annual leave around certain games.
It is critical that you are aware of these and plan accordingly. Don’t flatline your annual leave allocation over the year, as demand is not static. To answer the question, yes, there will be times when exceeding the allowance in favour of the employee is the right thing to do. Just make sure that everyone is aware of what is happening, to prevent marketing running a promotion, IT rolling out a new system, or training wanting to upskill everyone. In addition, ensure that operational leads are aware that service levels may suffer and that offline activities, like 1-to-1s and team meeting may not happen.
Ultimately, joined up thinking makes this possible. Thinking in isolation and not sharing the plan will cause these classic mistakes.
I’ve written about Planning for Christmas Leave in the past, so won’t go into any detail in this article. However, I will write again that there is no excuse for leaving this the last minute (e.g. Autumn to plan). We know when it is!
How do you track annual leave taken versus overall balance?
As it’s 2022, this should be App based, with everyone having access and sight to their working patterns and annual leave. This could include notifications and alerts to help guide people throughout the year to make better decisions. These could be to advise of available annual leave, if too much or not enough leave has been taken, as well as possible warning signs around too many weeks of continuous work without a break.
As mentioned earlier, there is a responsibility for each individual to book their own annual leave, however they should also be supported with regular updates and communication. Team Leaders should discuss annual leave, especially when reviewing performance and contribution, alongside attendance and presenteeism. The Planning teams should also be providing regular updates at a team and department level to identify future problems and prepare appropriately.
Waiting until 2-months before the end of the year to advise who has gone over on their leave and who hasn’t taken enough is bad practice. Especially, if you then blame the employees for not using, or for using too much leave.
Like a “Fit-bit” exercise tracker, tracking attendance and annual leave should drive understanding and learning for each individual and collectively as an organisation. Attitudes and behaviours towards absence and annual leave have changed, therefore policies, practices and procedures need to keep evolving to remain relevant and future proof.
Everyone is different and everyone will require some personalisation. What is right for one person may not work for another so don’t take a single minded one-size-fits all approach. Offer options for people to select, alongside the understanding that they may be trading off one benefit in favour for another.
Personal bias and opinion shouldn’t dictate the annual leave policy. This “old-fashioned”, often top-down approach will ultimately drive the culture of the business. Likewise you can’t offer everyone everything, there will be parameters and limits to what is possible. Being open and transparent, keeping the dialogue open will support understanding and improve how people use annual leave.
Time should be taken and invested in educating employees how to take annual leave, as well as supporting managers in managing the process. Not everyone reads the HR policy, and few people remember what is said during the first few weeks of induction training. People learn from the people around them and the “way things are done around here”, so get these behaviours right and keep working on them.
Don’t look at Annual Leave in isolation, there needs to be a joined approach with all types of absence along with performance and contribution. Also, consider annual leave when designing working patterns, as a better understanding could change what hours an employee works.
As mentioned throughout this article, if you have any thoughts, ideas or questions please add them to the comments below, or drop me a separate email. I’m really keen to capture different approaches which have worked.
Author: Phil Anderson, Director at The Forum
Date Published: 7th June 2022