Bank Holidays: Should they Deduct from Holiday Entitlement? image

Bank Holidays: Should they Deduct from Holiday Entitlement?

Staff Squared date icon10th January 2019

Tag iconManaging staff

It’s that time of year again. Christmas is over and we’re left contemplating the year that has just passed us by faster than its predecessor while easing our way back to normality after consuming more than our share of turkey, pudding and mulled wine. More important to most of us than the glorious amounts of overindulgence is the long-awaited and well-deserved break that the festive season brings.

For a lot of employers, Christmas closure can be a bit of a headache. There are three bank holidays in the space of a week which can prove to be an HR nightmare, especially when many staff members are likely to request additional holiday around this time if the company itself doesn’t close for the duration.

This has got us thinking about bank holidays in general and how they should be handled. We all look forward to long weekends and it’s even better when you sit safely in the knowledge that you aren’t going to lose any holiday or wonga for your extra sleep in. Though, are there any benefits for an employer as a result of allowing staff to take bank holidays on top of their annual holiday entitlement and what is the cost to companies who decide to implement this? What about the disadvantages?

What are Employees Entitled to?

There is no statutory entitlement for employees where bank holidays are concerned, meaning that their right to take time off work on these days is dependent on their contract of employment.

Some companies may require their staff to work bank holidays, others might allow their employees to take the time off as part of their holiday entitlement while some employers will give staff time off on bank holidays in addition to their annual leave entitlement.

Things to Consider when Deciding on how to Award Bank Holidays to Staff

The Disadvantages

While the benefit of allowing staff to take bank holidays off, regardless of whether you include this in their holiday allowance or not, there are a few things that should be considered before deciding whether or not to award bank holidays on top of annual holiday entitlement.


It’s unlawful to treat part-time workers less favourably than full-timers in any way and bank holiday entitlement is no different. Whatever you decide to invoke when it comes down to public holidays, the same rule must apply across the board.

To ensure that part-time staff are being given the right amount of paid time off, you must work out a pro-rated allowance of bank holidays based on the number of days they work. This is irrespective of whether a bank holiday falls on a day they aren’t contracted to work or not.

Statutory Holiday

Between 2007 and 2009, legislation stipulating statutory holiday entitlement increased significantly to twenty-eight days (twenty days plus eight bank holidays). However, depending on the contractual wording adopted, there is a danger of inadvertently giving staff more holiday than they are entitled to.

The Government dealt with this issue by introducing transitional provisions in relation to employers who already provided all their workers with 28 days’ holiday or the pro-rata equivalent for part-time workers.

These new provisions allow employers to avoid giving employees who already have the correct amount of holiday from receiving more than intended. However, it really wouldn’t go amiss to check and double check the terms in an employee’s contract of employment to ensure that you don’t unwittingly give away more holiday to new starters than intended by adopting this style of holiday provision.

The Holiday Year

If your holiday year runs from January to December, you have has nothing to worry about as all bank holidays for the year will fall nicely within that period; however, should it run from 1st April to 31st March, (especially if your staff have 20 days holiday plus bank holidays), there is danger of not giving staff enough holiday or giving too much depending on when the Easter weekend falls. For example, this year, the Easter bank holidays fall on Friday 19th and Monday 22nd April, meaning that all eight bank holidays fall within the holiday year.

In the April 2015 – March 2016 holiday year, Easter fell twice within these dates, meaning that staff had an additional two days; whereas, in 2017, Easter weekend fell in March, resulting in only six bank holidays falling in that holiday year. This would mean that staff working on 20 days plus bank holidays contracts would only receive twenty-six days, two less than legislation allows. Therefore, in this scenario, you would have to give your staff extra holiday to ensure that they are given their minimum entitlement.

The Cost to Business

Considering part-timers, statutory holiday entitlement laws and the way your holiday year works are all important when deciding how best to handle bank holidays within your company. However, the most direct disadvantage of not deducting bank holidays from holiday entitlement is the cost.

Assuming that your staff earn the national living wage of £7.83 per hour on a 37.5 hour week, over the year you would have to pay them an additional £469.80. While that might not sound like much, it soon adds up the larger a company becomes – for a company with fifty employees, this would be an additional £23,490 per year.

The Advantage

Ordinarily, the advantages of a process would be listed first – why jump straight in with the negatives, right? On this occasion, the cons might seem to outweigh the pros in number, but this time, quality over quantity might just be the deciding factor.

With the fast-paced nature of today’s business world, the number one concern on most employers’ minds is ensuring that employees have a good work-life balance. Not only is it important for personal health and relationships, but having stability between your personal life and work can nurture greater efficiency and productivity while on the clock.

What better way to foster a good work-life balance than to ensure that your staff have a satisfactory level of holiday? Especially if you allow them to take bank holidays in addition to their annual entitlement.

To Deduct or not to Deduct

One thing’s for sure – regardless of whether you give your staff bank holidays in addition to their annual holiday entitlement or not (or even let them take bank holidays at all), you should clearly set out where you stand with bank holidays in their contracts, including:

Any right they have to take time off on a bank holiday.
If that time off will be paid.
What they will be compensated if they work on a bank holiday despite not having to –   i.e. their normal rate of pay, time-and-a-half or double-time.

Like most things, there are both positives and negatives to allowing your staff to take bank holidays in addition to their holiday entitlement. As a company, you will need to consider things like whether you can justify closing for an extra day, if you have a customer base who rely on being able to contact you at all times or if allowing staff to take paid bank holidays in addition to their holiday allowance is cost effective for your business.

Ultimately, you should go for whichever option is most beneficial to you as the employer, your employees and your company as a whole. Although, after weighing up the good and the bad, it might just be that refraining from deducting bank holidays from staff holiday entitlement might just be the way forward.

If you are unsure of the amount of holiday your staff are entitled to, we’ve got you covered. You can work out exactly what to award them by using our holiday calculator.

Written by Clarisse Levitan

Lead First Line Customer Support Agent - Staff Squared

Clarisse works as the Lead of our Customer Support Team to provide all of our customers with the very best care and guidance when using their HR software.

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