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Holiday Days: Use Them or Lose Them?

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It may not seem like it just yet, but already the days are getting shorter and the nights longer, and soon enough, the spectre of year-end will once again rear its head. For employers, this means that now is a pertinent time to remind staff that once their holiday days for the year have passed, they won’t be coming back. For any business owner, ensuring the productivity and wellbeing of staff is paramount. Allowing employees to take time off from work, relax, recharge and spend quality time with their loved ones is crucial to this function. 

Alas, it is not uncommon for employees to hesitate when using up their holiday days, and many will find their unused holiday time is then wiped off the books when the new year rolls around if the organisation opts for the ‘use it or lose it’ structure. This newsletter will explore the importance of encouraging employees to use their time off before losing out, and what the benefits are to both the employees and the business at large.

The Underuse of Holiday Days 

For starters, it’s key to know exactly the extent of the issue. According to statisticians Timetastic, the situation in the UK is rather a bleak one[1]:

  • 62% of workers didn’t take all their annual leave in 2022.
  • Only 1 in 5 employees get paid for unused annual leave.
  • More than 1 in 10 workers say they didn’t take all their annual leave because they felt pressured by management.
  • Only 8% of workers have taken compassionate leave in the last year.
  • Women are far more likely than men to use all their annual leave (50% vs 28%)

These figures illustrate scale and scope of the issue. If almost two-thirds of workers aren’t taking all of their annual leave, then there must be underlying causes behind it which hint at an ongoing problem in the UK workplace culture.

Why Aren’t Employees Using Their Holidays?

That same poll found that one of the major aspects of employees refusing to use their allotted holiday pay was a relatively simple one: they were paid out for unused time off. However, although that may seem on the surface as though workers would simply prefer the money rather than the time off, it also shows that only 18.6% of businesses surveyed actually do pay for unused annual leave.

That still leaves 43.4% unaccounted for. When delving into the data, the situation becomes even more unclear: 12% state that there’s no specific reason for not using it, and 8.9% were unsure. Stranger still is that up to 11% said that they actually didn’t want to.

The remaining 10.5% were more forthright in their reasons, though. They suggested that the major reason that they didn’t take their holiday time is because they felt pressure not to do so from management.

Considering the vagueness in the replies of others, that figure is likelier far higher in reality. This hints at an unease, a general feeling that the work being asked of them is too important for them to take time off away from it, and that if they did so, they would fall behind. However, such an attitude is likely to cause fatigue, burnout and low morale, even among the best and hardest workers. Next, we’ll look at the reasons why employers should be encouraging their staff to take their time off.

The Benefits of Time Off from Work

Despite this lack of take-up when it comes to time off and annual leave, there are some great reasons why you should be encouraging your employees to take their allotted holiday times – and even some alternatives.

  1. Employee Wellbeing

Overworking and burnout are serious concerns in today’s fast-paced economy. Taking time off to recuperate allows employees to strike a better balance between their home life and work life – the “work-life balance” – and has been shown to reduce stress and enhance mental and physical health. Indeed, studies suggest that those who take their allotted time off have a 28%reduced chance of taking sick leave instead[2].

  1. Increased Productivity

Contrary to what some may believe, taking holidays does not hinder productivity; instead, it enhances it. Employees return to work better motivated and energised, and this renewed enthusiasm often results in an increase in creativity, productivity and resilience to new challenges.

  1. Enhanced Employee Engagement

In the same vein, an employee who knows their employer values their wellbeing and personal time is likely to feel heartened and appreciated, and thereby engaged and satisfied in their work. This sense of engagement can lead to better staff retention, an improved sense of teamwork and an overall more positive workplace culture when done right. The alternative – a culture which dissuades employees from taking their time off – ends up resulting in higher turnover and a lack of morale, something no employer should be striving for.  

  1. Legal and Ethical Considerations

From a legal standpoint, workers in the UK are entitled to 5.6 weeks paid holiday per year. This means that for those work 5 days of the week, they must receive a minimum of 28 days paid annual leave each and every year. While an employer is allowed to include bank holidays and other public holidays within this structure, that’s still a considerable amount of off-time to account for. This differs for part-time workers, who accrue their time off on a pro rata basis, e.g. if they work for 3.5 days per week, then they are allowed up to 19.6 days leave per year (3.6 x 5.6). Failure to comply with these stipulations may results in fines or penalties for the employer, so, ensuring that they do indeed take their time off can help ensure compliance with legal and ethical standards as well.

  1. Avoiding Year-End Rush

Another consideration that business owners must face is that when all annual leave is left until the last minute, operational challenges may then begin to surface. If everyone is off all at once, the organisation can no function effectively. Conversely, by planning ahead and distributing holidays at different times, employers can avoid scheduling conflicts and disruptions to workflow and ensure smooth operations.

How Can Employers Encourage Employees to Use Their Annual Leave?

Now you know the benefits, the question remains: how do I ensure that my staff take their time off to begin with? Well, we have the answers.

  1. Practice What You Preach

If you aren’t taking time off yourself, then your employees will doubtlessly be reluctant to do so. Leadership and good management comes from the top down, so if you set the example and are shown to work hard as well as take your holidays – and enjoy them too – then that will follow on through the rest of the business.

  1. Make Use of Reminders

Employees are often busy working and may not necessarily think about their holiday days all that much. A gentle reminder, either in the form of an email or a quick conversation, can be a real difference maker. For one, it shows that you’re concerned about their wellbeing, and two, it may be just the prompt they need to get some good old rest and relaxation.

  1. Assure Employees that You’ve Got it All in Hand

One of the major stressors on many staff is the sense that, were they to take time off, their talents would be badly missed. Although this is of course true to an extent, it’s wise to remind employees not to worry about their job too much, and that you have other capable people on board that are happy to shoulder some of the burden. Sometimes it really is as simple as saying, ‘don’t worry, we’ve got this’.

  1. Unplug Your Workforce

In today’s always-online world, it can be difficult to detach oneself from one’s job. The emails and phone calls keep coming in, and it’s easy to fall into the trap of being ‘always on’. Instead, show your employees the value in going off-grid once in a while. Set up out-of-office replies on emails, divert phone calls back to the office: whatever your employees need to do to unplug themselves from the daily barrage of information.

  1. Ease Your Employees Back In

Another key mistake that so many businesses make is that once their staff return from their holiday, they are bombarded with meetings, messages and tasks to catch up on. By staggering the workload over a few weeks, employees are less likely to feel overwhelmed on their return from work, and, as a result, less likely to regret taking the time off in the first place.

What Are the Alternatives to a ‘Use it or Lose It’ Holiday Policy?

Finally, another significant point to remember is that a ‘use it or lose it’ policy isn’t the only one available. Instead, there are two main alternatives:

Carrying over holiday days

A worker eligible for the statutory minimum leave of 28 days may, subject to the employer’s consent, roll over a maximum of 8 days. If a worker’s leave exceeds 28 days, the employer may permit the carrying over of this additional contractual allowance. The employer is thus required to determine the number of carry-over days for the succeeding leave year and incorporate this in the employment contract. Conversely, employers may choose to exercise discretion over the carry-over of any unused days, perhaps considering individual requests on a case-by-case basis. This approach is useful in that it avoids the sometimes mad end-of-year scramble, as employees can rest assured that at least some of the holidays they haven’t taken are instead carried across to the following year.

Paying in lieu of holiday

While there’s no automatic right for employees to be paid for unused annual leave (unless their contract is terminated), if an employer offers more than the standard 28 days leave, they and the employee can agree to separate pay arrangements for unused holiday. This can again be done on a discretionary basis, and once more provides staff with that added safety net.

Conclusion

It’s crucial for employers to urge their workers to use their holiday days before they are wiped at the end of the year. By doing so, you reap many, if not all, of the benefits outlined above. In turn, you allow your workplace culture to be one that values employees and their personal time, making your business more attractive – from both within and without – as a result.

Perhaps author Michael Zadoorian said it best:

“After a while, just staying alive becomes a full-time job. No wonder we need a vacation!”

[1] Timetastic. (2023). The State of Annual Leave – Statistics for 2022 & 2023.https://timetastic.co.uk/blog/annual-leave-statistics/

[2] CPD. (18th July 2023). The Importance of Taking Annual Leave. https://cpduk.co.uk/news/the-importance-of-taking-annual-leave

Angela Clay

A qualified employment law solicitor and our managing director, Angela has unparalleled legal expertise and decades of experience and knowledge to draw from. She’s a passionate speaker and writer that loves to keep employers updated with upcoming changes to legislation, and is a regular guest speaker on BBC Leicester Radio.