{"id":14863,"date":"2020-05-20T09:43:54","date_gmt":"2020-05-20T09:43:54","guid":{"rendered":"https:\/\/www.instantoffices.com\/blog\/?p=14863"},"modified":"2020-05-21T10:41:10","modified_gmt":"2020-05-21T10:41:10","slug":"annual-leave-uk-post-covid","status":"publish","type":"post","link":"https:\/\/www.instantoffices.com\/blog\/featured\/annual-leave-uk-post-covid\/","title":{"rendered":"How Much Could Annual Leave Bottlenecks Cost UK Businesses Post-COVID?"},"content":{"rendered":"

As employees return to work, businesses across the UK face a backlog of annual leave requests that could cost thousands of pounds.<\/p>\n

Allowing staff to accumulate annual leave is already a pitfall for UK employers. Now, with existing travel plans postponed, summer holidays \u2018cancelled\u2019 and 7.5 million furloughed workers at home, accrued holiday has piled up across the British workforce.<\/p>\n

A business would face operational failure by honouring too many leave requests, especially in cases where employees still have up to 80% of their annual leave remaining for the year. At the same time, it\u2019s not viable to pay staff out for those days instead. Here\u2019s why:<\/p>\n

Businesses Could Pay Up to \u00a3250,000 to Avoid Annual Leave Backlogs Post-COVID-19<\/span><\/strong><\/h2>\n

99% of businesses in the UK are SME\u2019s, made up of between 1 – 250 employees. Those with full-time workers are required to provide up to 20 days of paid holiday a year, excluding bank holidays. Using the average monthly UK salary as a baseline at \u00a32,214, and assuming most employees still have at least 50% of their annual leave owed, we have calculated how much the bottleneck could cost if SMEs paid staff for their leave days:<\/p>\n

\n\n\n\n\t\n\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t
Business Size by Number of Employees<\/th>Potential Cost for Ten Days of Annual Leave<\/th>\n<\/tr>\n<\/thead>\n
9<\/td>\u00a39,198<\/td>\n<\/tr>\n
10<\/td>\u00a310,220<\/td>\n<\/tr>\n
30<\/td>\u00a330,660<\/td>\n<\/tr>\n
50<\/td>\u00a351,100<\/td>\n<\/tr>\n
70<\/td>\u00a371,540<\/td>\n<\/tr>\n
90<\/td>\u00a391,980<\/td>\n<\/tr>\n
110<\/td>\u00a3112,420<\/td>\n<\/tr>\n
130<\/td>\u00a3132,860<\/td>\n<\/tr>\n
150<\/td>\u00a3153,300<\/td>\n<\/tr>\n
170<\/td>\u00a3173,740<\/td>\n<\/tr>\n
190<\/td>\u00a3194,180<\/td>\n<\/tr>\n
210<\/td>\u00a3214,620<\/td>\n<\/tr>\n
230<\/td>\u00a3235,060<\/td>\n<\/tr>\n
250<\/td>\u00a3255,500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n

As we head into the second half of 2020 and restrictions ease, the risk of too many employees requesting annual leave at the same time will pose a significant challenge for most businesses. For a small company, paying out 10 employees for only half of their annual leave days could set the business back more than \u00a310,000, while an SME of 250 employees faces up to \u00a3255,500 in costs.<\/p>\n

These figures are based on the average UK salary and just 50% of leave owing. In reality, the cost could be far higher for some UK businesses.<\/p>\n

Lucinda Pullinger, Global Head of HR at The Instant Group, says<\/strong> \u201cin addition to the financial challenges, there is a huge wellbeing element here too. Just because we are unable to take the destination holidays we hope for, it doesn\u2019t mean we don\u2019t need a change of pace. The need for a break from work has never been higher. The pressures of Covid-19 on some people are extreme, and protecting mental health is key right now. Taking a break, even if that break is at home under lockdown, is still beneficial, and employers should encourage employees to take their holiday to protect their wellbeing, not just for financial reasons.\u201d<\/p>\n

As the working population in the UK return to work, this logistical nightmare has been raised by businesses as one of their key concerns, with the government looking at several ways to assist the 5.9 million businesses who will be affected.<\/p>\n

Until recently, holiday entitlement in the UK meant the majority of leave had to be taken in the year or risk being lost.<\/p>\n

In amended legislation, certain employees and front line workers unable to take some or all of their annual leave due to the effects of Coronavirus may be able to carry up to four weeks into the next two years. While this gives some businesses a lifeline, it also raises additional challenges. It can assist key workers who have been forced to work to help the country cope, but is not aimed at employees who can\u2019t take a holiday due to a flight being cancelled.<\/p>\n

This means many businesses still face pay-out and carry over challenges, especially if employees leave the company before they have had a chance to take their allocated time off.<\/p>\n

 <\/p>\n

Click to enlarge<\/em>\"Cost-of-a-post-covid-annual-leave-bottleneck---Instant-Offices\"<\/a><\/p>\n

<\/h2>\n

Avoid the Annual Leave Bottleneck<\/span> <\/strong><\/h2>\n

Lucinda says businesses can work to avoid an annual leave bottleneck in the following ways:<\/p>\n

Encourage your people to take annual leave regularly<\/strong><\/span><\/p>\n

Working from home is no substitute for a holiday. Covid-19 and associated lockdown has put extreme pressure onto many people; whether that be around health concerns, financial concerns, juggling work with young children at home, and isolation, to name just the obvious ones. Businesses should be reminding their workforce to take time off, even during lockdown. While we may not have the holiday or the break that we had planned or would like to be taking, regular breaks are crucial for our mental and physical health.<\/p>\n

Lead by example<\/strong><\/span><\/p>\n

Now more than ever, managers and leaders should set an example by taking leave themselves. It is crucial to explain to team members that they are actually helping the business by taking a holiday, putting it in a better position coming out of COVID-19.<\/p>\n

Implement longer notice periods for leave requests<\/strong><\/span><\/p>\n

Increase the lead time for annual leave requests to give your business enough time to plan. If employees usually have to submit a request two days in advance, now is the time to increase it to four or more.<\/p>\n

Plan layered annual leave in advance<\/strong><\/span><\/p>\n

Enforcing leave is not the best way to approach the situation, as already stressed staff may feel cheated at having to use all of their leave while stuck at home. Instead, ask employees to volunteer to use a specific number of days by a certain date, so different departments can be coordinated.<\/p>\n

Speak to furloughed employees<\/strong><\/span><\/p>\n

It may seem odd to take a holiday while on furlough, but furloughed employees must get their usual pay, in full, for any holiday they take. This could be a win-win, as a business sees more annual leave taken, and an employee gets a pay top-up.<\/p>\n

Plan for 2021 now<\/strong><\/span><\/p>\n

Start discussions with team members now to get a clearer picture of what leave may look like in 2021. Factor in postponed holidays, time off for maternity leave, weddings, holidays and more to start understanding how carried over leave is going to be impacted next year.<\/p>\n

Method to calculate potential costs:<\/strong>
\n\u2022 We took average, full-time, weekly pay in the UK <\/a>in 2019 from the ONS and converted it to a daily rate.
\n\u2022 We used this to calculate the payout for two weeks of annual leave per employee.
\n\u2022 Business sizes are based on SMEs, which make up 99% of all businesses<\/a> in the UK.<\/h6>\n

 <\/p>\n

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As employees return to work, businesses across the UK face a backlog of annual leave requests that could cost thousands of pounds. Allowing staff to accumulate annual leave is already a pitfall for UK employers. Now, with existing travel plans postponed, summer holidays \u2018cancelled\u2019 and 7.5 million furloughed workers at home, accrued holiday has piled up across the British workforce. A business would face operational failure by honouring too many leave requests, especially in cases where employees still have up to 80% of their annual leave remaining for the year. At the same time, it\u2019s not viable to pay staff out for those days instead. Here\u2019s why: Businesses Could Pay Up to \u00a3250,000 to Avoid Annual Leave Backlogs Post-COVID-19 99% of businesses in the UK are SME\u2019s, made up of between 1 – 250 employees. Those with full-time workers are required to provide up to 20 days of paid holiday a year, excluding bank holidays. Using the average monthly UK salary as a baseline at \u00a32,214, and assuming most employees still have at least 50% of their annual leave owed, we have calculated how much the bottleneck could cost if SMEs paid staff for their leave days: As we head into the second half of 2020 and restrictions ease, the risk of too many employees requesting annual leave at the same time will pose a significant challenge for most businesses. For a small company, paying out 10 employees for only half of their annual leave days could set the business back more than \u00a310,000, while an SME of 250 employees faces up to \u00a3255,500 in costs. These figures are based on the average UK salary and just 50% of leave owing. In reality, the cost could be far higher for some UK businesses. Lucinda Pullinger, Global Head of HR at The Instant Group, says \u201cin addition to the financial challenges, there is a huge wellbeing element here too. Just because we are unable to take the destination holidays we hope for, it doesn\u2019t mean we don\u2019t need a change of pace. The need for a break from work has never been higher. The pressures of Covid-19 on some people are extreme, and protecting mental health is key right now. Taking a break, even if that break is at home under lockdown, is still beneficial, and employers should encourage employees to take their holiday to protect their wellbeing, not just for financial reasons.\u201d As the working population in the UK return to work, this logistical nightmare has been raised by businesses as one of their key concerns, with the government looking at several ways to assist the 5.9 million businesses who will be affected. Until recently, holiday entitlement in the UK meant the majority of leave had to be taken in the year or risk being lost. In amended legislation, certain employees and front line workers unable to take some or all of their annual leave due to the effects of Coronavirus may be able to carry up to four weeks into the next two years. While this gives some businesses a lifeline, it also raises additional challenges. It can assist key workers who have been forced to work to help the country cope, but is not aimed at employees who can\u2019t take a holiday due to a flight being cancelled. This means many businesses still face pay-out and carry over challenges, especially if employees leave the company before they have had a chance to take their allocated time off.   Click to enlarge Avoid the Annual Leave Bottleneck Lucinda says businesses can work to avoid an annual leave bottleneck in the following ways: Encourage your people to take annual leave regularly Working from home is no substitute for a holiday. Covid-19 and associated lockdown has put extreme pressure onto many people; whether that be around health concerns, financial concerns, juggling work with young children at home, and isolation, to name just the obvious ones. Businesses should be reminding their workforce to take time off, even during lockdown. While we may not have the holiday or the break that we had planned or would like to be taking, regular breaks are crucial for our mental and physical health. Lead by example Now more than ever, managers and leaders should set an example by taking leave themselves. It is crucial to explain to team members that they are actually helping the business by taking a holiday, putting it in a better position coming out of COVID-19. Implement longer notice periods for leave requests Increase the lead time for annual leave requests to give your business enough time to plan. If employees usually have to submit a request two days in advance, now is the time to increase it to four or more. Plan layered annual leave in advance Enforcing leave is not the best way to approach the situation, as already stressed staff may feel cheated at having to use all of their leave while stuck at home. Instead, ask employees to volunteer to use a specific number of days by a certain date, so different departments can be coordinated. Speak to furloughed employees It may seem odd to take a holiday while on furlough, but furloughed employees must get their usual pay, in full, for any holiday they take. This could be a win-win, as a business sees more annual leave taken, and an employee gets a pay top-up. Plan for 2021 now Start discussions with team members now to get a clearer picture of what leave may look like in 2021. Factor in postponed holidays, time off for maternity leave, weddings, holidays and more to start understanding how carried over leave is going to be impacted next year. Method to calculate potential costs: \u2022 We took average, full-time, weekly pay in the UK in 2019 from the ONS and converted it to a daily rate. \u2022 We used this to calculate the payout for two weeks of annual leave per employee. \u2022 Business sizes are based on SMEs, which<\/p>\n","protected":false},"author":1,"featured_media":14888,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[214],"tags":[],"class_list":["post-14863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured"],"yoast_head":"\nUK Businesses Face Costly Annual Leave Bottlenecks Post-COVID - Instant Offices Blog<\/title>\n<meta name=\"description\" content=\"As employees return to work, businesses face a backlog of annual leave requests that could cost thousands of pounds. 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