Letter proposing a change of holiday year

If you want to change your holiday year, you’ll need to consult with your staff using our letter, with a view to obtaining their agreement. Our letter suggests transitional arrangements under which the changeover holiday year will either be longer or shorter than the normal twelve months, resulting in a consequent pro rata calculation of employees’ holiday entitlement for that year.

Statutory provisions

Under the Working Time Regulations 1998, you can set your own holiday year in a “relevant agreement”, normally employees’ employment contracts. That’s what most employers do and the two most common holiday years chosen are 1 January to 31 December or 1 April to 31 March. If, for whatever reason, you’ve failed to specify a holiday year, under the Regulations it will be 1 October to 30 September for those employees who were already employed on 1 October 1998, or it will begin on the date the employee’s employment began (and each subsequent anniversary) for those employees who started employment after 1 October 1998. These default rules will result in your employees all having different holiday years, which is not only confusing but also a massive burden for you to administer, so it’s much better to have the same holiday year applying to all employees.

Changing the holiday year

If you later want to change your holiday year, perhaps to coincide with the company’s financial year, it’s possible to do so but you will need employee consent because, if your holiday year is set out in employment contracts, it’s contractual. You also need to think carefully about how you want to implement the change. Our Letter Proposing a Change of Holiday Year sets out your current holiday year start and end date and what you want to change it to, before going on to provide details of how you propose to do this. Our letter says this will involve a transitional arrangement for the next holiday year under which it will be either longer or shorter than the normal one-year period e.g. nine or 15 months rather than twelve, to enable you to then reach your new start date. Thereafter, subsequent holiday years would be on the new start and end date. Our letter confirms all this. Send out our letter at least three months in advance of your next holiday year starting to give plenty of time for consultation. Having set out your proposal, our letter then arranges a series of staff meetings so that you can discuss it with employees in more detail with a view to securing their agreement. Staff are more likely to accept the change if the transitional holiday year is longer, rather than shorter, than twelve months.

Transitional holiday entitlement

If you’re moving on to, say, a transitional 15-month holiday year, then the employee will be entitled to 125% of their normal paid holiday entitlement for that year. Whatever the number of months in the transitional holiday year, simply carry out a pro rata calculation. Our letter enables you to clearly set out this calculation.

As this type of contractual change is of an administrative nature rather than a change to substantive terms, you’ll probably get away with negative consent, i.e. by stating employees will be deemed to have accepted it unless they specifically object by a particular date. Even if you have the odd objector, it’s probably worth taking the risk of implementing the change anyway as it’s unlikely to be sufficiently serious as to enable the employee to resign and claim constructive dismissal.