What is a Holiday Year?
Your organisation’s holiday year is the period in which your employees must take allocated annual leave. When your employees take all their holiday leave in that year, the leave entitlement will reset at the start of the next holiday year. But if employees have entitlement remaining at the end of the holiday year, you’ll allow them to carry some of their leave over into the next year which does vary from country to country.
So When Should You Start Your Holiday Leave?
There’s more than one way to run a holiday year in your organisation. But the most common is to reset the holiday year every January.
This becomes more complex for organisations operating around the world. Many of which have multiple subsidiaries that operate separately on different holiday years.
However, there are some benefits to starting your holiday year at different points in the year, as we’ll explore in this guide. So let’s take a look at your options.
The Calendar Year
With this system, your holiday year ends on December 31 each year, starting again the very next day on January 1.
Pros: This system is easy for anyone to understand. Nobody has to remember any specific dates, and it should be easy for staff and management alike to keep track of their remaining leave.
Cons: By November and December, you’ll probably have multiple members of staff looking to use up their remaining leave at the end of the holiday year. If your industry is particularly busy over the festive period, for example, this could cause understaffing issues. Though even so, with a centralised absence management system you can ensure that everyone gets their entitled leave without risking any staff shortages.
The Financial Year
With this system, your holiday year would reset every April which is the most common starting month of the financial year.
Pros: Accountants and finance departments love this system, as it means they can include reliable holiday pay figures on balance sheets at the start of each fresh financial year.
Cons: It might be a struggle for some of your employees to grasp how this system works, particularly if they’ve no experience themselves of finances. Plus, you might get a similar issue that you would with the calendar year system, with staff rushing to use up all their leave around Easter time. But once again, a cloud-based absence management system can help you avoid potential staffing issues here.
The Academic Year
You could also take inspiration from schools and universities, and have your holiday year reset every September.
Pros: Any staff rushing to use up their leave at the end of the holiday year would be doing so in July and August. For many businesses these are quieter months anyway, so you might be able to avoid any potential staffing issues.
Cons: This system might make your finances a little more complicated, as you’ll have to use projected figures on your balance sheet at the start of each financial year.
Employee Start Date
A different holiday year for each employee? Why not? Have each employee’s personal holiday year commence from their start date, and reset on the anniversary of their start date each year.
Pros: As everyone’s holiday year will be staggered, you’ll avoid the potential staffing issues at the end of each holiday year. Plus, this system will make it easy to calculate new employees’ holiday allowance if they join you midway through the holiday year.
Cons: Your HR department will have to keep track of a separate holiday year for each employee in your company. This would be a challenge, but a good absence management system would make things a lot easier.
Which Holiday Year is Right For You?
No holiday year system is perfect, so it’s important to take the time to weigh up the pros and cons to decide which right for your organisation and how it operates. The most important thing is that you clearly communicate to all employees what system you’re using.
Whichever holiday year you choose, our integrated leave tracking systems will make it easier for everyone in your company to track their leave allowance. Meanwhile, you can establish rules and set levels to appropriate counties and team locations to avoid issues related to staffing levels and resourcing. Get in touch to see how e-days can take all the stress and complexity out of managing different holiday years with a centralised solution.