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Bank holiday shortfall | Are you at risk of underpaying leave?
Written on 19 March 2025
Employers could unintentionally underpay holiday entitlement this year due to an anomaly in the bank holiday calendar.
If your holiday year runs from April to March, some employees may not receive their full statutory leave entitlement – potentially putting organisations at risk of legal claims.
Why are there fewer bank holidays in 2024-25?
Most years, England and Wales have eight bank holidays. However, due to Easter falling later in 2025, there are only seven between 1 April 2024 and 31 March 2025.
This could impact employers who provide statutory minimum holiday entitlement, particularly if their holiday year follows the April to March cycle.
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The law and Working Time Regulations
Under the Working Time Regulations, employees are entitled to 28 days of annual leave, including bank holidays. This entitlement may be included in employment contracts as part of the overall leave allowance.
The reduction in the number of bank holidays this year could lead to a shortfall in the total leave entitlement if employees’ contracts specify a set number of days off plus bank holidays.
What to check for
To avoid issues, employers need to check how their contracts allocate holiday entitlement:
- If a contract states “28 days, including bank holidays”, the reduced number of bank holidays this year has no effect. Employees still receive their full entitlement.
- If a contract states “20 days plus all bank holidays”, an issue arises. With only seven bank holidays this year, affected employees would receive 27 days, which is below the statutory minimum.
What you can do now: Low-risk versus higher-risk approaches
If you’ve identified that your employees are affected, you have two main options to address the shortfall:
- Low-risk approach: Grant affected employees an extra day’s leave before 31 March 31 2025. This ensures compliance with the Working Time Regulations and avoids any potential claims for underpayment.
- Higher-risk approach: Do nothing. However, this could lead to claims for unlawful deduction from wages due to non-compliance with statutory holiday entitlement.
Steps employers should take now
Review your contracts: Ensure you are clear on how holiday entitlement is allocated, particularly in relation to bank holidays.
Decide on a course of action: If your employees’ contracts are affected, decide how best to address the shortfall.
Communicate changes or clarifications: Once you’ve decided on a course of action, make sure to communicate any changes or clarifications to your employees as soon as possible to ensure transparency.
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Don't risk it
Failing to provide the full statutory holiday entitlement could damage employee relations, create reputational risks, and potentially result in Employment Tribunal claims associated with underpaying leave.
Taking proactive steps now will help prevent these risks and ensure employees receive their correct holiday entitlement.
If you need support reviewing your contracts or handling holiday entitlement queries, WorkNest’s Employment Law and HR specialists can help. For advice and guidance, contact our team today on 0345 226 8393 or request your free consultation using the button below.
