Understanding Employee Bank Holiday Entitlement

Most people look forward to bank holidays, as for many employees, they mean a day off.

Employers need to make sure staff are given their bank holiday entitlements. If you neglect their statutory right, you could end up paying compensation, losing employees, and facing business damages.

In this guide, we'll look at what bank holiday entitlements are, what the law covers, and how to provide employees with paid annual leave.

What is a bank holiday entitlement?

A bank holiday entitlement allows some employees to take a day off from work during a public holiday.

Employees don’t have a legal right to paid time off for bank or public holidays. It only becomes their right if it’s agreed to within their employment contract. This stands if it’s added to a part-time or full-time employee’s contract.

Most people will work a 5-day week; meaning, they're have a statutory right to 28 days of statutory paid holiday per year. This statutory minimum adds up to 5.6 weeks of paid annual leave.

What is the difference between bank and public holidays?

People often get bank and public holidays confused with one another.

Bank holidays class as a type of public holiday. Usually, banks and other businesses stop trading to close for the day, allowing staff to take time off. Public holidays are usually taken for national or religious celebrations, like Christmas Day.

In England and Wales, there are generally eight bank holidays every year. These include:

• New Year's Day.
• Good Friday.
• Easter Monday.
• Early May Day.
• Spring Bank Holiday.
• Summer Bank Holiday. 
• Christmas Day.
• Boxing Day.

Are there additional bank holidays?

In the UK, people may get an additional bank holiday passed by the royal family. For example, UK citizens got an extra bank holiday when Queen Elizabeth died and for King Charles III's coronation.

In Northern Ireland and Scotland, people get additional holiday days on top of the UK ones. For example, Orangemen’s Day, St Andrew’s Day, and St Patrick’s Day.

What is the law on paying staff on bank holidays?

In the UK, there is no specific law on paying staff on bank holidays. However, there are statutory holiday entitlements you must provide in certain situations.

If full-time employees receive paid bank holidays, you need to provide this to your part-time workers. Employers must pay this statutory annual leave entitlement equally to all staff.

Part-time workers may also be entitled to a pro-rata bank holiday entitlement. This helps those whose shifts are regularly scheduled on Mondays and Fridays. (Bank Holidays often fall on these two days).

If a worker doesn't get their statutory annual leave entitlement, they could raise this as a dispute to an employment tribunal (ET). If the claim is upheld, employers may be forced to pay compensation for this and any other missing benefits.

Who is entitled to statutory paid holiday entitlement?

When it comes to statutory paid holiday entitlement, only certain people are entitled to it. For example, those who:

• Have an 'employee' status.
• Have a verbal or written contract.
• Have irregular hours.
• Have zero-hours contracts.
• Class as agency workers.

As well as annual leave entitlements, employees also have a legal right to paid leave during maternity, paternity, and parental leave. They can also put in holiday requests during sick leave if they wanted to utilise annual leave.

Are part-time employees entitled to paid bank holidays?

Part-time workers can receive paid leave during bank holidays. But as mentioned, this isn't a legal duty that you need to provide.

Many employers treat bank holidays as a statutory annual entitlement. Meaning, they'll usually let employees take the day off as paid holiday leave.

But other employers may choose to stay open and expect their staff to work. For example, a clothes shop stays open on Boxing Day due to higher holiday sales.

A part-time employee is also protected from less favourable treatment due to bank holidays. Their legal rights are outlined under the Part-Time Worker (Prevention of Less Favourable Treatment) Regulations 2000.

You need to think about part-time workers whose shifts are regularly scheduled on Mondays and Fridays. That’s because most bank holidays fall on these two days.

Without paid bank holiday entitlements, they’ll suffer from unfair shifts and wages compared to other part-time workers.

How to manage bank holiday entitlements in the workplace

Employers have a legal duty to provide all statutory annual leave rights to their staff.

You need to apply this across your workforce - for both full-time and part-time workers. By doing so, you can protect employee engagement and wellbeing.

Let's look at managing bank holiday entitlements in the workplace:

Calculate entitlements based on statutory leave

The first step you need to take is calculate how much holiday leave pay staff should get for bank holidays. There’s no legal rule, so it’s advisable to set it against statutory leave pay.

For full-time workers, you need to calculate it based on their contractual hours. For example, they work eight hours per day (for five days a week), so:

• 8 (hours worked) x 8 (bank holidays) = 64 entitlement hours.

For part-time workers, you need to calculate it based on a full-time worker's hours and bank holiday entitlement. For example, they work 30 hours per week, so:

• [30 (hours worked) ÷ 40 (full-time worker's hours)] x 64 (full-time workers' entitlements) = 48 entitlement hours.

Be transparent about bank holidays rules

When it comes to offering paid leave for bank holidays, it's entirely up to employers.

Whatever your decision is, you must be transparent about the rules with your staff. Make sure they know whether they'll have annual leave or not.

Aim to include bank holidays in every staff handbook and contract of employment. If you decide to make changes to these terms, make sure you announce this to all your staff. For example, anyone who works irregular hours or days a week.

Discuss the reasons for working bank holidays

Some businesses may decide it's more beneficial to remain open to work on a bank holiday. This is commonly seen in industries like retail or hospitality.

If you decide to stay open on national holidays, make sure you discuss the reasons with your staff.

You should explain to them why you've chosen to stay open. Either highlight that they've agreed to work in their employment contract. Or you can offer them the choice to work on bank holidays, as overtime or extra pay.

Think about part-time workers

Employers must think about their part-time workers during these national holidays.

You need to consider anyone who's part-time shift only covers Mondays and Fridays. Without offering paid holiday entitlement, they could unfairly lose shifts and wages compared to others.

The best way to manage this is by giving part-time workers a pro-rata entitlement. This agreement should include bank holidays. It'll keep track of the days they normally work; and fairly calculate them against the entire year.

Can you choose to close on bank holidays?

Yes, employers can choose to close on bank holidays; especially if this isn't a normal business practice.

There are no legal rules for bank holidays, so it’s best to treat it like annual leave. Inform your staff at least twice as many days before the date you decide to close.

For example, you want to close on Christmas Day and Boxing Day. So, you'll need to inform staff at least four days before these holiday dates.

These types of decisions can cause significant changes for the employees, as well as your business. It might end up affecting your staff's annual leave entitlement or holiday pay.

What if an employee wants to work on a bank holiday?

Sometimes, an employee may want to work on a bank holiday. Maybe public holidays fall on their Monday shifts, so they'll be missing out on regular wages.

They may ask to take a day's holiday as 'time in lieu'. This is when they ask to work and take annual leave on another day.

It's up to you whether to accept their request or refuse holiday requests. Employees can only get paid in lieu of bank holidays if it's part of their unused holiday entitlement.

Remember, if an employee works on bank holidays, they're still entitled to their full 5.6 weeks of paid time off. (Meaning, they're entitled to 28 days' holiday).

Get expert advice on bank holiday entitlement with Peninsula

Employers need to be cautious when dealing with bank holidays. Remember, it's not a lawful duty to offer this as statutory annual holiday entitlement. However, there are certain legislations you need to comply with.

If you don't follow a proper holiday entitlement process, you could end up paying missing benefits and even compensation on top.

Peninsula offers expert advice on bank holiday entitlements. Our HR team offers 24/7 HR employment advice which is available 365 days a year.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.