Why a 1-Jan holiday year could be causing you pain – a complete analysis

Holiday can be a tricky thing to manage. 

On one side, there’s the nitty-gritty… Tracking holiday balances. Calculating the accruals for casual staff. Monitoring colleagues’ working patterns & average hours over the 52-week reference period. And planning for the financial implications of when holidays are taken. 

On another, there’s the human side. Perhaps a policy for how much notice has to be given before requesting a holiday (and maybe how many colleagues can be off concurrently). As well as responding as quickly as possible when your team requests absence.

What’s more, holiday is of course a legal right. So, you’ve got to be careful you’re doing things by the book. 

Naturally, Rotaready will help with all of this (it’d be weird for me to write a blog on a topic that we couldn’t, wouldn’t it?) That said, however much easier we can make things, we can’t make the challenge of holiday management completely disappear.

But could something as simple as the date of your holiday year be a help or a hindrance with all this?

We analysed millions of holiday records booked using Rotaready to find out.

The chart below shows the distribution of holidays taken across the calendar year. December and August are the busiest months for holiday; which won’t come as a surprise, given these months coincide with Christmas and school holidays. If you’re familiar with the operations within hospitality, leisure or retail businesses (which we exclusively partner with), the high number of holidays in January won’t come as a surprise either. December is an extremely busy time for these industries, and teams are encouraged to take holiday after the festive rush.

Let’s now take a look at how the date of the holiday year affects things. Across all Rotaready customers, 43% use a 1-Jan holiday year. Another 43% opt for 1-Apr, with the remaining 14% using a different holiday year altogether.

The chart below shows the distribution of holidays taken during the holiday year; with month one being the first month of the holiday year. For example:

• if your holiday year runs from 1-Jan, a holiday taken in January would count as being in month 1
• similarly, if your holiday year runs from 1-Apr, holiday taken in April would also count as being in month 1

You can immediately see a very different profile. A general upwards trend as the year progresses, peaking in month 12, regardless of when the holiday year begins.

There are two big reasons for this…

Holiday accrual

The majority of hourly paid staff will accrue holiday in line with the hours they work; this is usually at the statutory rate of 12.07%. Although some customers use a higher rate as a reward – perhaps for performance, or length of service. As such, a colleague will start a holiday year with no holiday, and start to accumulate as they work.

Side note: the benefit of this approach is that, by default, a colleague can’t take more holiday than they’ve accrued. This means that in the event of someone leaving the business, you won’t be in a position of having to make a deduction on their final payslip to recover an overpayment (which can be problematic if there’s a particularly large overspend).

As a result of having to wait to accrue holiday before being able to use it (a week’s holiday will take about eight weeks to accrue), hourly-paid staff take their holidays later in the holiday year.

The ‘holiday bomb’

Whilst some businesses we work with offer a carry-over policy for untaken holiday at the end of the holiday year; most take a ‘use it or lose it’ approach. This results in a rush towards the end of the year, where colleagues look to take their well-earned holiday before the opportunity is missed. This is sometimes referred to as the ‘holiday bomb’, and can have significant financial implications if it’s not been planned for.

So what?

These two factors jointly mean holidays are taken towards the end of the holiday year, regardless of when the holiday year starts. 

Now, it’s true that these two factors aren’t unique to the hospitality, leisure and retail industries. The main difference compared with other industries, however, is just how busy and important the festive season is to the likes of restaurants, pubs, bars, cafés, hotels, attractions and shops.

So, if you’re a hospitality, leisure or retail business reading this, could choosing a different holiday year to 1-Jan ease the logistical and financial burdens through the busy Christmas period? Alternatively, your business might peak at another time of the year; in which case could the date of your holiday year be hindering you?

Customer viewpoint: Signature Group

Signature Group are a leading Scottish hospitality group made up of over 20 bars, restaurants, hotels, night clubs and a brewery, who we’ve been hugely proud to partner since 2017.

We caught up with HR Manager, Nicola Wallace, to get her insight on the impact of Signature Group’s holiday year running from 1-Nov.

“Staff mental wellbeing is a core priority point for Signature Group. Time off is of course a big factor here, as holidays offer a chance to relax and unwind. Over the years we’ve found how our teams (and in particular younger colleagues) typically don’t plan their holidays too far ahead. To minimise the risk of someone feeling burned out, we use Rotaready to identify those who aren’t taking as much time off as they should, and subsequently encourage them to plan a break.

As with all businesses, we see an increase in time off requests towards the end of the holiday year. There’s never a quiet month for us, but by running our holiday year from 1 November, it means the holiday requests are for dates in October, which is typically a more manageable month than other times of the year. 

Furthermore, like with all hospitality operators, December is an incredibly busy and important period for us. To ensure we have enough hands on deck to uphold our service standards, we have a policy to minimise holidays throughout December, instead encouraging them for January. Running our holiday year from 1 November means that accrued holiday balances are lower in December which therefore makes our policy logistically easier to uphold.”

If you have any questions about this blog, just email us at team@rotaready.com or message us via the live chat on our website. We’ll be happy to answer any questions you have.