Employee holidays and the cost-of-living crisis

One of the issues with employee benefits is that, over time, their existence can be taken for granted and their ability to be changed or used strategically is overlooked.  In addition, many businesses fail to plan for holiday time being taken later in the year than the popular spring and summer periods.

Accordingly, here are three things to think about regarding the use of holiday days in 2023:

1. Make sure that holiday days are not becoming “stockpiled”

An obvious impact of the current fiscal policy to reduce inflation through higher prices is that people can afford to do less with their money.

As a result, for those who do not have a specific reason to take a holiday over the summer (for example, they have no requirement for childcare in school holidays) there can be a reluctance to take holiday days during the summer – as they would “just be wasted”.

It is likely that this position will be exacerbated in 2023 with people working at home and being able to adjust their hours in the week so as to be able to transition from work to local events and activities without the need to take holiday.

Whilst such flexibility will be appreciated by employees, their holiday days will still accrue.  Accordingly, if, as we all hope, the cost-of-living crisis is brought under control towards the end of 2023, this may lead to a situation where an increasing number of people wish to take their full holiday allocation (rather than roll it into next year if such things are allowed).

Whilst holiday requests can, of course, be denied (for example if it leads to wider staffing issues) such denials can often cause friction and resentment and, in the worst case, be a reason for a valued employee leaving.  As a result, it is important that someone centrally reviews the amount of time that has and hasn’t been taken and takes steps to manage this effectively.

2. Offer more holidays (or change working requirements)

For many, the cost of childcare over the summer can be a serious financial drain.  A simple win may be to offer even one or two extra days holiday to everyone.  Recent studies are showing the power of a permanent four day week, so the provision of an extra day or two is likely to be well received.

Alternatively, and especially if the summer is a quieter time for you as a business, could you introduce “summer hours” (a concept popular in the Nordics). Typically this consists of centrally sanctioned early finishes to one or more working days per week.

Finally, you could also consider going to a temporary four day week for part of the summer holiday period.

3. Offer to buy back holidays

Typically, the “buy back” of holiday days only occurs at the beginning of a new benefits/fiscal year.  However, other than some increased administration, there is nothing stopping you opening up this opportunity at the mid-way point of the year.

Obviously, before making such an offer it should be checked that there are sufficient cash reserves available – but the sale back of any excess holiday days over the statutory minimum, could be a welcome income boost to employees.

In addition, by doing this in June/July – the payment of the additional monies can be spread over the rest of the calendar year – allowing for more even cashflow for the business.  The position as to whether these are pensionable payments would also need to be reviewed internally – although there is potential for these to be paid as if they were bonuses and therefore as a different line in the payroll.

Should you want someone to help you explore your thinking on this issue, please contact Stuart James in the first instance.

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