This is an important notice for employers operating a holiday year between 1 April to 31 March.
The holiday year from April 2024 to March 2025 includes one less Bank Holiday, as Easter 2025 falls late. For some employers, this shortfall may need to be addressed to avoid the risk of unlawful deduction from wages—though this depends on how the employment contract is worded in relation to managing bank holidays, as the following scenarios highlight:
Scenario 1:
The contract states: “Our holiday year runs from April to March. The holiday entitlement is 5.6 weeks’ paid annual leave including public and bank holidays.”
In this case, the worker should still receive their full statutory paid leave entitlement of 28 days, as 5.6 weeks translates to 28 days. However, we recommend auditing your absence management system to ensure there is no inadvertent under-allocation of leave—especially where bank holidays are managed separately from the standard 20 days’ leave. In such cases, the standard allowance may need to be increased to 21 days to account for the fact that there are only 7 Bank Holidays in this holiday year.
Scenario 2:
The contract states: “Our holiday year runs from April to March. The holiday entitlement is 28 days including bank holidays.”
In this case, we don’t believe there is an issue, as workers will still have received their full entitlement of 28 days, including all the Bank Holidays that fell within the holiday year—even though there happened to be one fewer than usual.
Scenario 3:
The contract states: “Our holiday year runs from April to March. The holiday entitlement is 20 days plus all Bank Holidays.”
In this scenario, we don’t believe workers will have received their full statutory paid leave entitlement. With only 7 Bank Holidays falling within the 2024/25 holiday year, the total leave amounts to just 27 days—one day short of the statutory minimum of 28 days’ paid annual leave.
What Employers Should Do Next?
It is vital that any shortfall in statutory paid leave is corrected. We recommend reviewing your holiday entitlement clauses across your Contracts of Employment, Workers’ Agreements, and Annual Leave Policy to determine whether your business is affected.
If you identify that workers have only received 27 days of paid annual leave during the 2024/25 holiday year, an additional day’s paid leave should be provided before 31 March 2025. To manage the potential business impact of this correction, employers may wish to reach a mutual agreement with their workforce on when the additional day can be taken. However, it is important that these discussions begin promptly and within the current holiday year.
We suggest limiting the window for taking this extra day of leave to a short period—such as within the first three months of the next holiday year—to minimise disruption while ensuring workers receive their full statutory entitlement as close as possible to the year in which it accrued.
Failing to Act: Legal and Financial Risks
Failing to address this issue could result in claims for unlawful deduction of wages and breach of contract. It is therefore essential to assess your business’s position now and take swift, appropriate action where necessary.
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