Flexible bank holiday policy: how it works & risks for employers

Between royal funerals, coronations and Easter breaks, the UK has had a glut of time off for employees in recent memory. Every once in a while, the weather even turned up for those extra long weekends.

But, with the start of a new year meaning a change in the UK bank holidays coming up, many employers – including high-profile firms like Grant Thornton – are exploring a flexible bank holiday policy.

The idea is to give employees more control over their annual leave, with staff able to exchange a government-set public holiday for a more convenient date. Diversity and inclusion is a driver. Four of the eight UK bank holidays are tied to the Christian calendar, and flexible leave would support a multi-faith workforce.

Still, before you steam ahead and let workers swap out their bank holidays like they’re at a Bureau de Change, small business owners must think about the practical, and legal, ramifications of such a policy.

Below, we’ll explain the rewards (and risks) of a flexible bank holiday policy. We’ll also outline the major HR and employment law considerations for SMEs seeking to adopt it.

What is a flexible bank holiday policy and how does it work?

Holiday entitlement is an important part of employment law. Currently, all UK employees get at least 5.6 weeks’ paid annual leave each year (pro-rated for part-time staff). Typically, this can be broken down into 20 days’ holiday, plus eight bank holidays.

Unless stated otherwise in an employment contract, there is no legal requirement to give employees bank holidays off. 

In many sectors, however, it is the default to give employees bank holidays off and to require them to take leave as part of their holiday entitlement over these periods.

Permitting staff to save up their allotted public holidays means employees can choose to swap out the leave for a date that is more meaningful to them, rather than being forced to go off work at a particular time.

What are the benefits for employees?

Any employment benefit or perk that empowers workers to choose their own time off will be welcomed by staff. However, one of the most persuasive reasons for introducing a flexible bank holiday policy is for Diversity, Equity, and Inclusion (DEI) purposes.

Half of UK public holidays align with Christian events, such as Christmas and Easter. Giving people the option to observe these religious dates takes a more supportive approach that accommodates those who wish to celebrate other religious and cultural observances.

Arsalan Rashid is an Employment Solicitor at Aaron & Partners. Rashid says, “as a practising Muslim, time off for Easter is nice, but I would much rather use that leave to celebrate Eid with family and friends.

“Allowing a “pick and mix” type leave policy for bank holidays would certainly help in fostering a more inclusive workplace.”

That said, the policy is not just for religious celebration. Last month’s additional day off, implemented to celebrate the King’s coronation, is a prime example of a marmite event that some people might have felt ambivalent towards.

Pam Hinds, head of people at staff management software provider RotaCloud, comments: “While many will have been pleased with an extra day of leave, not everyone was interested in the coronation. People may have preferred to take holidays at different times.”

RotaCloud recently researched employee attitudes towards public holidays. In a survey of 2,000 UK workers, 14% of respondents said that they don’t celebrate Christmas and would prefer to take other holidays off instead.

What are the benefits for employers?

Granting employees the ability to swap their bank holidays is not a new idea. Hospitality firms, and others based in seasonal industries, have implemented the practice for decades, allowing them to stay open during Easter and Christmas.

The approach helps companies to optimise staffing levels, and reduce the need for temporary workers, saving time and resources.

Naturally, allowing a staff member to swap the holiday, rather than lose it, has equal benefit for the individual and the business.

Tom Gill is a sustainability expert based in London. He describes working on a bank holiday to attend a conference. “There have been times where a bank holiday feels wasted,” he says. “I was able to save that day to take a different working day off, travelling back home to see the family without using my annual leave.”

Recruitment benefit

Flexible working arrangements are popping up left, right, and centre as post-COVID, employees increasingly prioritise meaningful work that reflects their personal interests, as well as professional.

Last month, we published an exclusive survey into employee attitudes towards another trending flexible policy; the four-day week. Our findings show that, of the 78% of employees who want a four-day work week, 61% would choose it for a better work-life balance.

Executing any employment policy which gives workers more control over their personal activities will bring plenty of positives for your firm’s people strategy.

Managing happier staff, who feel valued by their company, leads to improved employee engagement. This, in turn, reduces staff turnover – a priceless advantage in light of the ongoing hiring crisis.

Office for National Statistics (ONS) figures show that job-to-job moves in 2022 reached a record average of 946,000, driven by resignations rather than dismissals.

Nonetheless, the outlook is not as rosy for some sectors. Alan Price, CEO of HR software provider BrightHR, warns “[for certain industries] the policy could be difficult and perhaps even unfeasible, such as those in an education setting, where the organisation is typically closed on the bank holidays set by the government.

“Firms should assess their individual needs and demands and consider whether it is an effective option for them.”

What are the legal considerations?

There are several HR and employment law considerations for SMEs looking to adopt a flexible bank holiday policy.

To explain them, we enlisted the help of Rebecca Leppard, founder of Upgrading Women, a communication training and consultation company. Leppard has offered flexible bank holidays to staff since the firm launched last year.

1. Contractual considerations

Once you have decided to offer a flexible bank holiday policy, review all employment contracts to ensure they include up-to-date information on holiday entitlement clauses. Make sure to outline the process for requesting alternative holidays clearly.

Leppard explains: “This ensures that all employees are aware of their rights and the procedure to follow, reducing the likelihood of confusion or disputes.”

2. Communication and awareness

Benefits and perks are one of the top things that job seekers look for in a new position. Employers should communicate the availability of the policy to all employees, current and incoming. This will help to promote a positive and inclusive workplace culture where staff feel comfortable requesting time off for religious observance.

Leppard adds, “providing diversity and inclusion training to managers can also help ensure they are well-equipped to handle any questions or issues that may arise.”

3. Legal consultation

Understandably, holidays are an area that employees feel particularly strongly about. Given their influence over employee health and wellbeing, it’s important that business owners do not make any sudden changes that could dissuade staff from booking annual leave.

“As with any policy change, it’s advisable for SMEs to consult with an employment law expert to ensure that their proposed policy complies with all relevant legislation and does not inadvertently lead to discrimination or other legal issues”, says Leppard.

Want more advice on implementing a flexible bank holiday policy? Find out more about how small business HR providers can offer robust, expert advice for minimal cost.