British businesses are likely to face a “huge” backlog of annual leave requests that could cost businesses up to £255,500, as 8.5 million workers are currently furloughed at home – and more, given the potential negative impact on employee health, wellbeing and productivity.
A new survey has shown that for a small company, paying out 10 employees for only half of their annual leave days could set the business back more than £10,000, while an SME of 250 employees faces up to £255,500 in costs.
The research, carried out for Instant Offices, calculates how much it would cost for companies to pay staff for a minimum of two weeks of annual leave.
By collecting data and analysing the average monthly salary at a baseline at £2,214 and at least 50% of employee annual leave owed, researchers calculated how much it would cost for companies of different sizes to pay staff for a minimum of two weeks of annual leave.
A business would face operational failure by honouring too many leave requests, especially in cases where employees still have up to 80% of their annual leave remaining for the year. At the same time, it is not viable to pay staff out for those days instead.
Lucinda Pullinger, Global Head of HR at The Instant Group, said: “In addition to the financial challenges, there is a huge wellbeing element here too. Just because we are unable to take the destination holidays we hope for, it doesn’t mean we don’t need a change of pace.
“The need for a break from work has never been higher. The pressures of COVID-19 on some people are extreme, and protecting mental health is key right now. Taking a break, even if that break is at home under lockdown, is still beneficial, and employers should encourage employees to take their holiday to protect their wellbeing, not just for financial reasons.”
As the working population in the UK returns to work, Pullinger said this “logistical nightmare” has been raised by businesses as one of their key concerns, with the government looking at several ways to assist the 5.9 million businesses who will be affected.
More information on Instant Offices’ research in ‘How Much Could Annual Leave Bottlenecks Cost UK Businesses Post-COVID?’ is available here.