Creating a straightforward and legally sound holiday entitlement policy for your startup is key to attracting top talent, managing expectations, promoting employee well-being, and steering clear of any potential confusion. (Please see our other article on ‘Understanding Annual Holiday Pay Entitlement’ if you need some tips!)

It doesn’t have to be complicated, and you can always refine the policy as the team grows. To make things easier, we’ve included a really simple example policy at the end. 

Step 1: Define the Purpose of The Policy

Start by explaining why the policy exists and its importance for both the business and employees.

Example: Our holiday policy ensures that all employees understand their annual leave rights, enabling them to take time off to rest and recharge while supporting the smooth operation of the business.

Step 2: Confirm the Legal Framework

Reference the relevant UK legislation to establish the policy’s legal compliance.

Example: This policy complies with the Working Time Regulations 1998, which provide all employees and workers with the statutory minimum of 5.6 weeks of paid annual leave per year (pro-rated for part-time employees).

Step 3: Outline the Holiday Entitlement

Clearly define how much holiday your employees are entitled to.

  1. Full-Time Employees:
    • State the entitlement (e.g. 28 days per year, inclusive of bank holidays, for employees working 5 days per week)
  2. Part-Time Employees:
    • Include an explanation of pro-rata calculations (e.g., Entitlement is calculated based on the number of days or hours worked).
  3. Zero-Hours or Irregular Workers:
    • Mention the accrual rate (e.g. Entitlement accrues at 12.07% of hours worked).

Step 4: Define the Company Leave Year

Define the annual leave calendar for your business.

Example: The leave year runs from [1st January] to [31st December]. All annual leave should be taken within this period unless otherwise agreed with your manager.

Step 5: Address Bank Holidays

Explain how bank holidays are treated.

Step 6: Outline Booking Procedures

Provide clear steps for requesting and approving leave.

Example:

Step 7: Unused Leave and Carry-Over Rules

Specify what happens to any unused holiday entitlement.

Example:

Step 8: Accrual During Employment

Detail how holiday entitlement is accrued and calculated.

Example:

Step 9: Address Resignation or Termination

Explain how holiday is handled if one of the team resigns or their employment is terminated.

Example:

Step 10: Extra Leave or Company Benefits

Specify any additional leave or benefits.

Additional unpaid or paid leave may be granted for personal circumstances, subject to management discretion.

Step 11: Define Responsibilities

Clarify the roles of both employees and managers in ensuring smooth leave management.

Example:

Step 12: Add a Discretionary Clause

Include flexibility for any unique situations that may arise.

Example: The company reserves the right to review and adjust this policy as necessary, ensuring compliance with legal obligations and business needs.

Step 13: Finalize and Communicate

Example Holiday Policy

  1. Purpose: Our holiday policy ensures that all employees understand their annual leave rights, enabling them to take time off to rest and recharge while supporting the smooth operation of the business.
  2. Legal Framework: This policy complies with the Working Time Regulations 1998, which provide all employees and workers with the statutory minimum of 5.6 weeks of paid annual leave per year (pro-rated for part-time employees).
  3. Entitlement
    • Full-Time Employees- 28 days per year, inclusive of bank holidays
    • Part-Time Employees- Part-time workers are entitled to the same 5.6 weeks of leave, pro-rated based on the number of days they work. (If someone works 3 days per week, their entitlement is 5.6 × 3 = 16.8 days)
  4. Leave Year: 1st January- 31st December 
  5. Bank Holidays: Bank holidays are included within the annual leave entitlement. 
  6. Booking Procedures: Please book all leave through the Aigence portal
  7. Unused Leave: Employees are encouraged to take their full entitlement within the leave year. But in certain circumstances your manager can approve up to [5 days] to be carried over to the next holiday year.
  8. Accrual: Employees accrue leave on a monthly basis, calculated at 1/12th of the annual entitlement per month worked.
  9. Termination or Resignation: 
  1. Extra Leave: Employees are entitled to an additional day off on their birthday
  2. Responsibilities: 
  1. Policy Review and Amendments: The company reserves the right to review and adjust this policy as necessary, ensuring compliance with legal obligations and business needs.