Holiday year

Tax year end is on the horizon and every year I marvel at why it is that despite 365 long days ahead of me, it seems that there is always a last minute rush when a deadline looms large?!

It’s a basic fact of life, if we are given a deadline, we work to it, and it will always cause a glut or a backlog, often when we are at our busiest!

Unfortunately, none of us can change the date of tax year-end, unless your name is Phillip Hammond of course!  But we do have the ability to spread some of our other workload and deadlines throughout the year, to a time that is more convenient to suit our business needs.  Take your Holiday Year for example….

Many SMEs set their default contractual holiday year 1 Jan to 31 Dec, often without giving much thought as to any business justification for why? As a consequence, the day after you return from Xmas break, you probably find yourself contending with a big glut of holiday requests; and we all know that holiday requests mean a lot of paperwork and HR wrangling. There will be forms to file, spreadsheets to check, calendars to update, potential conflicts and the hope that after all that, no errors have been made. This all means that business owners and managers are spending valuable time on admin rather than getting on with the key job of hand in the New Year, which is growing the business.

But do you have to start the holiday year in January?  Does your holiday year start and finish really matter?

Although the majority of the companies choose to restart their holiday year in January, many companies choose to start their annual leave allowance in different months dependant on business need. Have you considered what dates might suit your business best? Here are some options you might want to mull over:

  1. The calendar year: 1st January – 31st December

January is the obvious one. It offers an easy to understand starting point for holiday entitlement which is relatively simple for line managers and business owners to keep on top of. Unfortunately, using the start of January as the start of your employees’ holiday entitlement can lead to a rush to use up entitlement over the Christmas period, which can often leave your operation stretched during the festive period.

Additionally, this can add to the surge in holiday requests in the first week back in January, which is already traditionally the busiest time of year for requesting annual leave. This is coupled with the time of year that business owners really want to concentrate on the future of their business.

  1. The financial year: 1st April to 31st March

There are a growing number of businesses aligning their employee holiday entitlement to the financial year, By aligning your holiday allowance this way financial reporting may be much simpler. However, one of the main problems with starting your holiday entitlement on the 1st April is the date of the Easter Bank Holidays. If Easter occurs before April you may well be faced with people trying to use up their annual leave before they lose their entitlement.

  1. Employee start date

Some companies choose to begin the annual leave year on the date that the individual employee starts at the company. The benefit of this is that there are no tricky calculations when it comes to accruals. This will save time and effort, initially at least.

However, there may be potential issues down the line when it comes to how many holidays staff have left, carrying over holidays and updating the holiday year. These problems can be accentuated if an employee leaves or has their contract terminated. If owners don’t have a robust and accurate holiday management system in place, this is when systems are going to go wrong.

  1. Academic year

In education it is common to run holiday allowance between 1st September to the 31st August, aligning the entitlement with the academic year. This is also becoming much more common with companies who are hiring large amounts of graduates or school leavers.

That is not to say that you have to use the 31st August, you could choose anytime over the summer months. The advantage of this is that employees will often be planning to take holidays over this period for months in advance. Due to the planned holiday activity in this period there will be less of a surge in holiday requests at the end of the holiday entitlement year.

Ultimately, you must do what is right for your business. If you have a lot of graduates, operating a summer start pattern could be right for you. If you want to keep things simple for everyone to understand, maybe then a January start pattern is better for your business.

Whatever holiday start date you choose, putting in place policies and procedures around your holiday entitlement is essential.  So give me a call or drop me a line today if you want to discuss your holiday framework.