Why Holiday Trading Is Beneficial for Employers
Why Holiday Trading Is Beneficial for Employers
Our attitudes to life and work have evolved massively in recent years, with a game-changing switch in how companies and employees view the wellbeing in the workplace. Employees and job hunters now value and expect a healthy work-life balance, with employee benefits that help to avoid stress and burnout in the workplace.
A relatively easy way to help achieve this is through holiday trading. This salary sacrifice scheme allows employees to purchase annual leave by sacrificing some of their salary, or enables them to sell back unused holiday for cash. It’s a much-loved perk among employees in the UK, but not an option all senior leaders may have considered before.
In this article, we aim to equip HR professionals with advice for overcoming leadership resistance to introducing holiday trading. We’ll identify and address concerns senior leaders may have and provide practical information and strategies for gaining buy-in.
What is holiday trading?
A holiday trading scheme allows employees to purchase extra annual leave by sacrificing a portion of their salary, or sell unused time off back to their employer.
This means that an employee could use their bought days to extend a family holiday at their favourite European resort or trade holiday days to top up their savings account.
It empowers them with more control and flexibility in managing their workload, so they can affordably achieve an improved work-life balance. As working norms in the UK have changed, holiday trading has become hugely popular with employees.
Our recent Boostworks’ whitepaper ‘Beyond the Salary Slip‘ revealed that less than half (46%) of employees feel their company’s benefits, rewards and recognition programme aligns with their personal values and aspirations. In addition, an overwhelming 90% of employees want real-life rewards including extra days off and more flexible hours.
Holiday TradingWho should be eligible for a holiday trading scheme?
To put hesitant senior leaders’ minds at ease, it’s worth noting that not every request should be guaranteed. All requests to buy or sell holiday days must be reviewed by management or HR, approving or declining them based on eligibility and other business needs.
Here are some factors to consider for eligibility:
- Whether employees are in their probationary period.
- Performance issues.
- Ensuring employees don’t fall below the National Minimum Wage when buying holiday.
- Preventing employees from falling below the statutory minimum holiday entitlement when selling holiday.
When deliberating requests, it’s important to remember that workers in the UK who work a five-day week must legally receive at least 28 days’ paid annual leave a year. It’s up to the employer whether to include bank holidays as part of a worker’s statutory annual leave.
How to calculate an employee’s day rate
To calculate what an employee’s pay should be after they have purchased additional annual leave, you can use the following formula:
The number of days they work per week x 52 weeks per year = x number of working days in the year
For example, if an employee works five days a week, they will work 260 days a year. So, you can work out their day rate by dividing their annual salary by 260.
Fortunately, with Boostworks’ Holiday Trading Scheme, our handy calculator does all the hard work for you. It allows employees to see how much they would have to pay/be paid based on their salary and the number of holiday they want to buy/sell. No manual calculations required!
The benefits of holiday trading for employers
The benefits for employees are clear, but what about for employers? If you need to demonstrate a business case for introducing holiday trading, you can draw upon the advantages mentioned below.
1. Attract top talent
The battle for talented professionals is so fierce that your business needs to offer employee perks that put you ahead of the competition. Especially as 38% of employees say the benefits scheme was crucial to them accepting a job offer.
A holiday trading scheme demonstrates to prospective employees that your organisation has strong values and takes company culture seriously.
Top employees seek businesses that are committed to supporting staff wellbeing, so enabling employees to buy and sell annual leave shows you’re a people-focused employer.
2. Retain your best employees
Employees are more likely to stay at an organisation if they feel valued. Holiday trading gives staff the power to manage their own time, so they can tailor their work-life balance. This also fosters a sense of respect and trust.
If employees are allowed to prioritise their health and wellbeing, you can create a happier and more driven workforce. A holiday trading scheme achieves this, helping employees to avoid burnout and encouraging them to take more of a break if they need it.
Your staff are unlikely to search for opportunities elsewhere if they feel looked after.
3. Save on National Insurance contributions
Employers are also able to benefit financially from a holiday trading scheme. This is because an employee’s Income Tax and National Insurance (NI) are based on their remaining salary after the holiday purchase deduction. So, as an employer, you won’t make NI contributions on the amount sacrificed.
For businesses with large teams, this can generate significant annual savings. Plus, organisations can allocate these saved funds elsewhere, freeing up budgets for professional development initiatives and other worthy causes.
4. Reduce absenteeism
Workplace absences are at their highest level for over a decade. Fortunately, a holiday trading scheme allows employees to feel more rested, encouraging them to prioritise their health and wellbeing. With more time to recover and relax, the number of sickness absences is likely to decrease.
Not only does it help to create a healthier, more reliable workforce, but employees will also be able to manage personal commitments without taking unplanned absences.
5. Boost morale and productivity
Holiday trading fosters a culture of flexibility and trust among the workforce, which will have a direct impact on morale and productivity. Allowing employees to recharge and take more time off creates an energised workplace environment and enhances job satisfaction.
Plus, higher employee engagement can be a massive boost to business performance – a win-win for everyone involved.
Holiday trading with Boostworks
A massive 65% of employees want improvements to their current benefits programme, which is where a holiday trading scheme can come into play.
Your business has a lot to gain from offering holiday trading, so it’s vital that you effectively roll out the scheme and ensure it’s a success. The best way of achieving this is with Boostworks.
Our holiday trading scheme is the best in the business. Tailored to your business’s needs, we provide a flexible, easy-to-use platform that works for you and your people.
To enjoy all of the benefits we have discussed in this article, get in touch with a friendly member of our customer support team today.
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