Buying and selling annual leave

Buying and selling annual leave

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I work within the charity sector and am currently making recommendations regarding the buying and selling of annual leave. We are looking to offer a scheme whereby employees can sell up to 5 days of their annual leave (this would still ensure that every employee is taking the minimum amount of holiday required by law) or alternatively can buy up to 10 days leave.

I would like to set up a discussion group to gather information relating to similar schemes. I am particularly interested in hearing of HR’s experience of similar schemes and whether they tend to be successful or not. It would be good to hear about the uptake and whether more people tend to buy leave or sell.

Any information given will be much appreciated and will be treated in confidence.

Thanks for your help.

Kind Regards


Replies (2)

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By sarahhowardillston
26th May 2009 12:01

Hi Juliet,

We put a clause in our Time Off policy a few years ago which stated that individuals could cash in any untaken holidays above the statutory minimum. This was designed to ensure that people who had genuinely been unable to take some of their holidays due to the needs of the business did not lose out. However in practice it meant that the vast majority of our staff saved up to eight days of their holidays and cashed them in during the month of January when of course it’s nice to have some extra income! We had a large cash pay-out to make at the start of each year (which grew significantly along with our headcount) and we felt we were moving away from the correct work/life balance we try to encourage. With this in mind we amended the clause from ‘holiday cash-in’ to ‘holiday buy-back scheme’ to imply that it wasn’t just an option to earn some extra money each year. We also encouraged line managers to actively encourage appropriate use of holiday entitlement. So you may wish to consider what the motivation is for offering the scheme to start with (the need to have staff in more often or an opportunity to give people the opportunity of a lump sum payment) and word your policy accordingly right from the word go. Unfortunately I can’t offer any advice on schemes offering additional holiday days but I hope the above is of interest.


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By hobsonf
26th May 2009 12:40

If someone leaves part way through the holiday year you are obliged to give them additional pay pro-rata to the days not taken. But that does not mean that you are an equivalent amount better off if they simply do not take all their holidays. You have budgeted for £x salary cost/employee and not £x plus y days extra pay. Only in a few jobs will an extra day's attendance produce a day's worth of additional, saleable output or avoid a day's worth of temporary hire.

Some options are to lay down that up to, say, 5 days holiday (cumulative maximum) can be carried forward to the next holiday year and/or that employees are responsible for planning to take their holiday throughout the year (with management agreement, I assume) and that pay-in-lieu will only be made where pre-booked holidays are cancelled at the employers request.

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