(featured image: Judy Dean/Flickr CC BY SA 2.0)

No such thing as a free bank holiday

UK employers face a dilemma when the government decrees an extra bank holiday. Granting it costs money, but not granting it may have consequences too.

Koen Smets
7 min readSep 23, 2022

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In Britain, public holidays are ‘bank holidays’, a relic from the days when the Bank of England used to close for business on certain saints’ days. There used to be as many as forty, but nowadays, the number is a more modest eight — unless, that is, the government ‘grants’ an additional one. This happened earlier this year, in celebration of the late Queen’s platinum jubilee. And it happened again on September 19th, the day of her funeral.

Before 2007, many employers offered annual paid leave (typically 20 days or more) on top of the statutory bank holidays. However, the total annual statutory (minimum) leave entitlement was 20 days, including the eight official bank holidays, and some other employers offered no more. In 2007 this was increased to 28 days (including the bank holidays) for every full-time employee. The devil, though, is in the (contractual) detail. Some employment contracts make explicit reference to the eight standard bank holidays, others are vaguer with clauses like “including bank holidays”. So, whether an employer is legally obliged to treat additional bank holidays as paid days leave depends on what their contracts say. In other words, it’s a bit of a mess. And as they had received no notice of the Queen’s death, many had to improvise: should those that don’t have to give their staff an extra day’s paid leave invoke the lack of obligation, or make a gesture of goodwill and pay up?

Framing the cost

Here is how one professional services firm handled this predicament. In a communication to staff, the general manager announced that the business would be closed on the day of the funeral — a decision that “represents a cost to the business”. She offered staff three options: they could take a holiday from their existing entitlement, take the day as unpaid leave (and sacrifice a day’s pay), or work overtime over the next few weeks to make good the time off.

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Koen Smets

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius