New holiday legislation could leave employees feeling blue

Government proposals to increase paid annual holiday entitlement could compromise benefits for employees, say experts. The proposals could see statutory annual leave increased from 20 to 28 days (based on an average 5 day working week). While the prospect of additional time-off will leave many employees happy faced, it could cost businesses millions of pounds and leave them with little choice but to impose holiday deadlines, pressurise employees into taking holidays needlessly and reduce other employee benefits and perks. Employment law expert Neil Gouldson from national law firm Lewis Hymanson Small explains: "Businesses realise that they need to offer good remuneration packages to recruit and retain the best staff. To achieve this, packages are developed bespoke to employee requirements and the demands of the business sector they operate in. "Increasing the statutory holiday entitlement will provide businesses with less flexibility to develop tailored, employee focused terms of employment." Under the proposed changes to the Working Time Regulation 1998, employers will have to make paid time-off available for Bank and public holidays in addition to the standard four week entitlement. The changes will take place in two stages with the first taking place on 1st October 2007 when the entitlement will increase from 20 to 24 days. The second change will take place on 1st October 2008 and see the entitlement raised from 24 to 28 days. Gouldson adds: "These changes will increase operational costs for businesses during busy Bank Holiday periods, meaning reduced holiday and overtime rates for people that opt to work. In addition, the new legislation may see an increase in unused holidays, meaning that businesses have to roll them over or buy them back. This would have a detrimental impact on cashflow and operational efficiency, and result in businesses having to be more stringent in managing annual leave. "Increasing statutory annual leave is not the answer to improving work life balance for employees. It is merely a smoke and mirrors exercise to divert public attention from high taxes. Government effort should be focused on assisting business development. This will provide employers with more resource to provide greater benefits packages that can be tailored to meet individual requirements."