Annual leave backlog cost to UK SMEs revealed



As employees return to work, UK businesses are likely to face a backlog of annual leave requests that could cost thousands of pounds.


By collecting data and analysing the average monthly salary at a baseline at £2,214 and at least 50% of employee annual leave owed, co-working specialist Instant Offices has calculated how much it would cost for companies of different sizes to pay staff for a minimum of two weeks of annual leave.


A business would face operational failure by honouring too many leave requests, especially in cases where employees still have up to 80% of their annual leave remaining for the year. At the same time, it’s not viable to pay staff out for those days instead.


Research shows 99% of businesses in the UK are SME’s, made up of between 1 – 250 employees. Those with full-time workers are required to provide up to 20 days of paid holiday a year, excluding bank holidays.


Heading into the second half of 2020 and lockdown restrictions ease, the risk of too many employees requesting annual leave at the same time will pose a significant challenge for most businesses. For a small company, paying out ten employees for only half of their annual leave days could set the business back more than £10k, while an SME of 250 employees faces up to £255k in costs.


Lucinda Pullinger, global head of HR at The Instant Group, said: “In addition to the financial challenges, there is a huge wellbeing element here too. Just because we are unable to take the destination holidays we hope for, it doesn’t mean we don’t need a change of pace. The need for a break from work has never been higher. The pressures of Covid-19 on some people are extreme, and protecting mental health is key right now.


“Taking a break, even if that break is at home under lockdown, is still beneficial, and employers should encourage employees to take their holiday to protect their wellbeing, not just for financial reasons.”


As the working population in the UK return to work, this logistical nightmare has been raised by businesses as one of their key concerns, with the Government looking at several ways to assist the 5.9 million businesses who will be affected.


This means many businesses still face pay-out and carry over challenges, especially if employees leave the company before they have had a chance to take their allocated time off.

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