Buying or selling annual leave policy template

Overview

The purpose of this policy is to cover rules for any employee who wishes to buy or sell annual leave.

Scope

This policy is applicable to all employees of [company name].

General principles

[Company] operates a policy of granting all employees [six] weeks' paid holiday entitlement each year. It is recognised, however, that some employees may wish to take longer or shorter periods of holidays and for this reason we operate a policy of allowing employees to "buy" or "sell" some holiday entitlement, subject to certain conditions.

Conditions for buying or selling holiday

The conditions for buying or selling holiday are as follows:

• [Company]’s holiday year runs from [January to December].

• The maximum amount of additional annual leave that you may "buy" in any one holiday year is [one week/two weeks].

• The maximum amount of annual leave that you may "sell" in any one holiday year is [one week/two weeks]. This is because no employee can sell holiday that results in his/her being entitled to less than the statutory minimum paid holiday each year as this would be in breach of the Working Time Regulations 1998.

• [Company] reserves the right to refuse an application to buy or sell holiday. In respect of a request to buy holiday, it may be necessary to refuse a request for operational or technical reasons related to your job. In respect of a request to sell holiday, management may decline to agree if, in their opinion, it would not be in your best interests.

• Additional holiday leave granted under this scheme must be taken within the holiday year in respect of which the application was received. If, having bought additional holiday, you fail to take it before the end of the relevant holiday year, the leave will be lost altogether. In these circumstances, no compensatory payment or salary adjustment will be made.

Procedure

• If you wish to buy or sell some of your holiday entitlement you must apply in writing to [your line manager/the job title]].

• Applications for buying or selling holiday entitlement must be received no later than [one month before the end of the current holiday year in respect of the following holiday year/the end of [June/September/December] for the current holiday year].

• Where an application has been received and approved, you will be notified in writing and the appropriate change to your pay notified to you.

• You will then be given [one week/two weeks] to confirm in writing that you wish to go ahead. Provided written confirmation of this is received from you, the new rate of pay will be applied on the first day of the next month unless your final confirmation is received only after the payroll deadline, in which case the change to pay will be recalculated and take effect on the first day of the following month). [For weekly paid employees, the change will take effect [two/three/four] weeks after the application has been completed.]

• If you have applied to buy or sell holiday but fail (following notification of the adjusted rate of pay) to provide written confirmation within [one week/two weeks] that you would like to go ahead with the arrangement to buy or sell holiday leave, the application will be cancelled.

Adjustments to pay

If you opt to buy or sell annual holiday, this will result in a reduction or enhancement to your [monthly salary/weekly wage] either for the whole holiday year (when the request was processed before the end of the previous holiday year) or for part of the holiday year. The new [monthly salary/weekly wage] will be calculated and notified to you as soon as possible after your application to buy or sell holiday has been received and approved.

For monthly paid employees, the calculation will be arrived at by:

• dividing your annual salary [including commission payments/overtime/travelling-time allowances] by 52 to determine your notional weekly pay;

• multiplying this figure by the number of weeks you wish to buy;

• dividing this figure by the remaining number of months in the holiday year to arrive at the amount that will be deducted from your monthly salary;

• subtracting that figure from your normal monthly salary; and

• applying the new level of monthly pay from the agreed date through to the end of that holiday year.

Calculations for selling holiday will be carried out in the same way except your monthly pay will be increased rather than reduced.

For weekly paid employees, the total amount to be deducted will be divided by the remaining number of weeks (as opposed to months) in the holiday year in order to arrive at the amount to be deducted from your weekly pay.