What is Holiday Enhance?
This scheme gives employees to buy or sell some of their allocated annual holiday allowance
Book a Free Consultation TodayWhy offer this benefit?
Holiday Buy
This benefit is proven to drive employee engagement in your employee benefits package. Implementing Holiday Buy for several of our clients has led to a noticeable reduction in their sickness absenteeism (over and above year on year fluctuations).
Save 13.8%
Your business will save 13.8% in Employers National Insurance contributions for every £1 of salary an employee uses to buy holiday. These NIC saving to the business can be very significant.
Holiday sell scheme
If your business permits employees to sell unused holiday back to the company the financial impact of this often hits at one point towards end of the start or end of the holiday year. By implementing a structured holiday sell scheme, the cost of employees selling holiday back to the company is predictably spread over 12 months.
How it works?
If you have employees who continually have holiday remaining at the end of each holiday year (59% of UK employees regularly do not take all of their holiday allowance) Holiday Sell would enable them to sell some of this holiday back to the company. Holiday Buy enables employees to purchase additional holiday, with most clients granting a maximum of five days. It supports employees who may want additional annual leave for a special occasion, childcare reasons or just want an improved work-life balance.
Before implementing this benefit, we always advise companies to make sure it is right for their business model, for example, if you need to ensure minimum levels of resource for shift cover. It is very important from a Wellbeing perspective that employees do take holidays, therefore employees are not permitted to take themselves below statutory minimum holiday allowances, which is why five days is normally the maximum number of holidays employees can sell. If you have employees who work on a part time basis then their holiday buy and sell will be pro-rated. You do not have to operate both holiday buy and sell, many of our clients choose to operate only one option (usually Holiday Buy). Our systems can process holiday enhance for companies that work in days and hours or a combination of both.
How is it paid for?
When buying holiday, the benefits platform calculates the total value of the number of days the employee wishes to buy and provides a cost, which the employer deducts over 12 equal monthly payments from the employee’s salary. Most employers choose to align the payroll deduction cycle with their annual holiday windows. The employee will save tax and national insurance on the money they exchange through salary sacrifice. The employer will also save National Insurance on the value of holidays bought, these savings can be very significant to the point where they often offset the costs of the software to run and administer the scheme.
When employees sell holiday the reverse occurs, the calculation process is the same, but the total value of the holidays sold is paid into the employees’ wages. Companies tend to spread this over 12 equal monthly credits. There are companies that allow employees to take the value of holidays sold as a lump sum but as an employer you need to consider impact on cashflow, tax implications for the employee, such pushing them into another tax bracket, and recovery process if they leave. The employee will pay tax and national insurance on the value of holidays sold. The process also generates a National Insurance charge for the employer. Employers need to decide whether to absorb this cost, pass this cost on to the employee or, if operating, holiday buy, take the rough with the smooth and use the NI savings generated from employees buying holiday to offset the costs of those who choose to sell.
Employers can choose to operate one option only, unsurprisingly buying holiday tends to be more popular than selling holiday.
