Back to work – and in go the holiday requests. Counting the cost of time off

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As employees return to work, UK businesses are likely to face a backlog of annual leave requests that could run into many thousands.

In an exercise that involved collecting data and analysing the average monthly salary at a baseline at £2,214 and at least half of employee annual  leave owed, a co-working specialist calculated how much it would cost for companies of different sizes to pay staff for a minimum of two weeks of annual leave.

Whether or not employees will be able to take a holiday, a business could face operational failure by honouring too many leave requests, especially in cases where employees still have up to 80 per cent of their entitlement  remaining for the year. At the same time, it’s not viable to pay staff  in lieu.

Heading into the second half of 2020 with the Lockdown restrictions easing, the risk of too many employees requesting annual leave at the same time will pose a significant challenge for most businesses.

Just because we are unable to take the destination holidays we hope for, it doesn’t mean we don’t need a change of pace

For a small company, paying out 10 employees for only half of their annual leave days could set the business back more than £10,000, while an SME of 250 employees faces up to £255,500 in costs, according to the calculations by Instant Offices.

Lucinda Pullinger, Global Head of HR at The Instant Group, says “In 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’t mean we don’t 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.”

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.

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.

Pullinger suggests bosses should set an example by taking leave themselves – explaining to team members that they are actually helping the business by taking a holiday, putting it in a better position coming out of Lockdown.

They should also increase the lead time for requests to give the business enough time to plan. Enforcing leave is not the best way to approach the situation, she says, as already stressed staff may feel cheated at having to use all their leave while stuck at home.

Instead, an employer could ask staff to volunteer to use a specific number of days by a certain date, so different departments can be co-ordinated.

The could also speak to furloughed employees. It may seem odd to take a holiday while on furlough, but they 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.

More about the research here