When should you start your holiday year?

Most businesses reset their annual leave in January, but are there other ways to run your holiday year? And do they make a difference? BrightHR explains.

First published on Thursday, Aug 13, 2020

Last updated on Friday, Jan 12, 2024

2 min read

Most businesses reset their annual leave in January. But are there other ways to run your holiday year? And does the annual leave year, affect your business? BrightHR explains.

According to our BrightHR data, around 75% of businesses using our smart HR software run their holiday year from 1st January to 31st December.

You might think this is the obvious way to manage holidays in your business, but you have more flexibility than you think…

So, when does the holiday year start?

The rules… there are no rules! But hold up, it’s not that simple.

When it comes to your business’s holiday year, it’s up to you, the employer, to decide when it runs. Whatever you decide, the important part is to make sure that you communicate this with your employees.

So, it’s best practice to make sure your employee contracts spell out when the holiday year starts and ends. They should also specify what their holiday entitlement is.

What happens if I don’t set out holiday leave year?

If you don’t do this, an employee’s annual leave year will automatically begin on one of two dates:

  • The first date the employee began working for you.
  • 1st October (the anniversary of the regulations becoming law, as set out by ACAS).

Yet, it can be confusing to keep track of different annual leave dates and rules. It's much simpler to take control and set out the holiday year yourself.

So which holiday year should you choose? Let’s take a look…

The calendar year

Three-quarters of businesses opt to run their holiday year from January to December. This makes the calendar year the most popular choice. Why?

It’s super simple, and the easiest way for both you and your staff to understand and keep track of annual leave dates. But there’s a downside…

In December, you might get a flood of holiday requests. Staff are trying to use up their holidays before the year is out.

You'll get that at the end of any holiday year. But this could be challenging for industries that get busier over the festive season. For example, the service industry. You don’t want to leave yourself short-staffed.

The fiscal year

A growing number of businesses are choosing to run their holiday year in line with the fiscal year. The fiscal year runs from April to March.

It can make writing your financial reports much more straightforward. For example, you can include the correct holiday pay figures on your balance sheet for the new fiscal year.

But it’s worth considering when Easter falls. If Easter happens early, you might get an influx of staff using up their holidays. You might already have fewer staff because of the Easter Bank Holidays.

The employee's start date

Choosing to start each employee’s holiday leave year on the date they started working at the company can be a helpful way to stagger staff holidays, so you avoid the end-of-year holiday booking frenzy.

You also don’t need to worry about complicated calculations if a new employee joins you halfway through your holiday year. But it might be chaotic to keep track of everyone’s different start dates and holidays…

How to make holiday leave a breeze

It doesn't matter how you structure your company's holiday year. BrightHR’s smart staff management software calculates each employee's entitlement for you.

Plus, it will alert you if there are any conflicts between employee holiday requests. This way, you can avoid having too many people off at the same time.

To find out more, speak to one of our friendly HR experts today on 0800 783 2806.

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