BrightHR’s Alan Price discusses the ways that business managers can structure their employees’ annual leave calendars and why it’s important.
Most businesses reset their annual leave in January. But are there other ways to run your holiday year? And does the annual leave year, affect your business?
So, when does the holiday year start?
The rules… there are no rules! But hold up, it’s not that simple.
When it comes to your business’s holiday year, it’s up to you, the employer, to decide when it runs. Whatever you decide, the important part is to make sure that you communicate this with your employees.
So, it’s best practice to make sure your employee contracts spell out when the holiday year starts and ends. They should also specify what their holiday entitlement is.
What happens if I don’t set out the holiday leave year?
If you don’t do this in the UK, an employee’s annual leave year will automatically begin on one of two dates: the first date the employee began working for you or 1 October (the anniversary of the regulations becoming law as set out by the Advisory, Conciliation and Arbitration Service, or ACAS).
Yet, it can be confusing to keep track of different annual leave dates and rules. It’s much simpler to take control and set out the holiday year yourself.
So which holiday year should you choose? Let’s take a look.
The calendar year
Three-quarters of businesses opt to run their holiday year from January to December. This makes the calendar year the most popular choice. Why?
It’s super simple, and the easiest way for both you and your staff to understand and keep track of annual leave dates. But there’s a downside.
In December, you might get a flood of holiday requests. Staff are trying to use up their holidays before the year is out.
You’ll get that at the end of any holiday year. But this could be challenging for industries that get busier over the festive season. For example, the service industry. You don’t want to leave yourself short-staffed.
The fiscal year
A growing number of businesses are choosing to run their holiday year in line with the fiscal year. The fiscal year runs from April to March.
It can make writing your financial reports much more straightforward. For example, you can include the correct holiday pay figures on your balance sheet for the new fiscal year.
But it’s worth considering when Easter falls. If Easter happens early, you might get an influx of staff using up their holidays. You might already have fewer staff because of the Easter bank holidays.
The employee’s start date
Choosing to start each employee’s holiday leave year on the date they started working at the company can be a helpful way to stagger staff holidays, so you avoid the end-of-year holiday-booking frenzy.
You also don’t need to worry about complicated calculations if a new employee joins you halfway through your holiday year. But it might be chaotic to keep track of everyone’s different start dates and holidays.
By Alan Price
Alan Price is the CEO at BrightHR and COO at the Peninsula Group. A version of this article was previously published on the BrightHR blog.
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