It’s a difficult time for businesses of all shapes, sizes, industries and sectors across the world.
While some have seen vastly increased workload bringing about challenges with managing capacity, many have unfortunately fallen victim to the uncertainty and economic effects and have been forced into redundancy.
While the UK Government have introduced the Job Retention Scheme which has benefited many organisations up and down the country, there are still some scenarios companies find themselves in that need a different type of solution.
This is where Holiday Trading comes in.
What is Holiday Trading?
The Holiday Trading scheme allows staff to purchase extra annual leave or sell annual leave back to their employer.
It’s a scheme used to help staff improve work-life balance in an affordable way, while employers benefit from savings on salary costs and reduced NI as well as reduced absenteeism and improved employee satisfaction and retention.
Employees who purchase additional annual leave spread the cost over 12 months and pay through salary sacrifice, making it an affordable way to improve work-life balance.
Typically, the employer has options in terms of setting the number of extra days annual leave an employee may purchase.
However, in order to help our clients, we’ve opened up the scheme to allow employers to give their staff the option to purchase even more annual leave days in order to manage hours and workload.
What options do businesses have?
To understand where Holiday Trading fits in, here’s a brief overview of the different scenarios a business may find themselves in and what options they have.
When a company experiences a complete or near total loss in revenue and faces financial crisis, unfortunately redundancies have to be made, while some companies even go out of business entirely.
Typically, the Furlough Scheme is used by a company when they experience a downturn in workload and face financial uncertainty. They’re faced with the challenge of balancing the books while maintaining a workforce to continue operating efficiently.
However, with the Furlough Scheme, staff are required not to work for their employer at all. This is where the Holiday Trading scheme comes in as an alternative.
Maintain or increase workforce
Some companies have since seen a maintained or increased workload and increased revenue and thus haven’t had to resort to using the Job Retention Scheme or make workers redundant. Some have even had to recruit further to cope with new demand.
Where does Holiday Trading fit in?
Many companies find themselves in a situation where they’re experiencing a slightly reduced workload and a certain level of financial uncertainty that they need to manage carefully.
For some companies, the Job Retention Scheme is still important but may only apply to some departments or areas of the business. There may be other areas where staff are still required to manage workload, however on reduced hours or days for example.
This is where Holiday Trading fits in, giving businesses more control over workload and payroll.
Here’s an example of how it works
Using the Holiday Trading scheme, staff purchase 12 extra annual leave days to be used over 12 weeks to reduce their working week by 1 day each week. Alternatively, it could be used to reduce the number of hours worked each day.
For the employee, they purchase their extra annual leave days through salary sacrifice, spreading the cost over a period of time set by the employer. It could be 6 months of 12 months, for example.
For the company, payroll and NI are reduced, and they avoid losing the employee as they would on the Furlough Scheme and without any difficult salary restructuring too.
How you use the scheme is entirely up to you
The number of extra annual leave days you require your staff to purchase and the period over which you require them to use it is totally up to you and your business needs.
For example, you might decide you need to reduce working hours for certain staff over 6 weeks rather than 12 as shown in the example above. You might decide that certain staff will be required more than others and so you may decide on an 8-week agreement for some and a 4-week agreement for others.
The beauty of the scheme is it’s flexibility which is why we’ve opened up the scheme for our clients to increase the number of days annual leave an employee can purchase.
What does Holiday Trading mean for employees?
For staff, they won’t be reduced to 80% of their salary as they would on the Furlough Scheme unless their employer tops it up.
It also means they won’t take a big hit to their salary initially as they spread the cost of their extra annual leave over the period of time set by the employer.
As the scheme is so flexible, some staff could even use Holiday Trading to further improve work-life balance at this time to help manage childcare.
The benefits of the Holiday Trading scheme extend beyond COVID-19
Not only can the Holiday Trading scheme help you through this current crisis, beyond that it will help give your staff a way to better manage their work-life balance and will help improve retention and reduce absenteeism.
The Coronavirus pandemic could change the way we work forever, with more flexible working practices and working from home becoming even more popular. Staff may be looking for more ways to improve their work-life balance beyond the pandemic, whether it’s to spend more time with family or take longer holidays.
Managing work-life balance may just become more popular than ever and the Holiday Trading scheme could be the key for employers in helping their staff achieve it.
For a full overview of the Holiday Trading scheme and all it’s benefits, take a look at our Holiday Trading scheme page.
The more options the better
Holiday Trading has been a lifeline for our clients and ourselves as a business. In a time of uncertainty, the more options you have available the better and Holiday Trading has given many businesses a valuable solution to the problems they’ve faced due to the Coronavirus pandemic.
How to set up the Holiday Trading scheme
To find out more about the scheme or to set up Holiday Trading for your business, get in touch and we’ll talk you through.
For the latest info on how caboodle are helping businesses during the Coronavirus pandemic, take a look at our COVID-19: how we can help page.