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Backlog of holiday leave could hamper recovery for small firms

2 June 2020

As employees return to work, UK businesses are likely to face a backlog of annual leave requests that could cost them thousands of pounds.

A study by Instant Offices has found that many small businesses could face operational failure if they have to honour too many leave requests, especially in cases where employees still have up to 80% of their annual leave remaining for the year.

Heading into the second half of 2020 as lockdown restrictions ease, the risk of too many employees requesting annual leave at the same time will pose a significant challenge for many businesses. Full-time workers are entitled to 20 days of paid holiday a year, excluding bank holidays.

Instant Offices has calculated how much it would cost for small companies to pay staff for a minimum of two weeks of annual leave, based on an average monthly salary of £2,214 and at least 50% of employee annual leave owed. For a small company, paying ten employees for only half of their annual leave days could set the business back more than £10,000.

"In addition to the financial challenges, there is a huge wellbeing element here too," said Lucinda Pullinger, global head of HR at The Instant Group.

"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 issue has been raised by businesses as one of their key concerns. In amended legislation, certain employees and front-line workers unable to take annual leave due to coronavirus may be able to carry up to four weeks into the next two years. However, this is not aimed at employees who can't take a holiday due to a holiday being cancelled. It 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.

Written by Rachel Miller.

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