Holiday entitlement at most firms is set on a yearly basis. In any given year each employee has a fixed number of paid days off, based on a legal entitlement, and any contractual rights to extra days. The annual nature of leave means that once-a-year holiday entitlement resets, with untaken leave usually lost and the full entitlement being available.
For many firms, the obvious date to use for the start of their holiday year is January 1st. This provides employees and managers with a level of simplicity – the holiday year is the same as the calendar year. Many other companies though choose different dates, and some even have different dates for different employees. Here’s a look at why you might choose to vary your dates and the advantages of different systems.
Changing the holiday year for the whole company
Matching your company’s year-end
Some company owners and managers find that it is useful to tie their annual leave year to their company year end, whether that is the government’s tax year end of April 5thor the anniversary of registration as a company. This approach has the advantage that the HR costs of annual leave, both administrative and in terms of holiday pay, overtime, and replacement staff costs, are included within one financial reporting period.
Echoing trade patterns
Many businesses experience a predictable peak in their trading. This is most obvious in certain industries such as leisure and tourism during the summer months, or retail in the run-up to Christmas. Other examples are less obvious, such as the distribution of flu vaccines, which are only given in the autumn, or in an organisation planning and holding an annual event or festival. By having the holiday year-end shortly before your busy period you can make sure that you do not have a rush of staff using up their leave entitlement at the same time as customer demand is highest.
For LeaveWizard users changing the date that your company uses for its holiday year end is easy. Simply by adjusting your default company leave year in the dashboard, the new date will be applied globally across all employees unless overridden.
Changing the holiday year within the company
Within LeaveWizard you can also easily change the holiday year for individual teams or employees. There are various reasons that you might consider this, including:
Following local culture
January 1 might make a lot of sense as a start date in Europe or the USA, but to a team based in China, the Chinese new year might be more obvious. Similarly, a leave year based around a summer rush in the northern hemisphere will be wrong for the Southern hemisphere. By setting appropriate leave years for each team or group of employees you can make sure your rules work for you, even in a global organisation.
Smoothing the holiday year-end rush
An issue faced by many companies is a spike in demand for annual leave during the last few weeks of the firm’s holiday year. This is the result of employees realising that they have paid leave entitlement that they will lose if it is not taken before the year-end. This can be reduced by reminding employees of their entitlement throughout the year (which can be set up automatically through LeaveWizard), but an even more powerful approach is not to have all employees using the same year-end.
One possible approach to spreading the year end is to base it on the month that the employee starts working at your organisation. This also simplifies the joining procedure, as every employee will start with a full year’s allocation of leave, so you have fewer pro-rata calculations to make. One downside though is that if you have regular recruitment drives, for example of recent graduates or school-leavers, then you will still have clusters of employees with the same year-end. Another solution used by some large companies is to use the month in which an employee’s birthday falls. This way you have a more or less evenly spread across the year.
However you organise your company year, LeaveWizard makes it easy to set up and apply, and our knowledge base and customer care team are there to help if you need guidance. Why not check out our other features and register for a free trial to experience seamlessly integrated annual leave for yourself?