It has been revealed in a recent survey that some small businesses are so desperate to cut costs they are considering reducing their staff holiday allowances.
The survey, which was carried out by insurance company MetLife and involved 400 small businesses, found that 27% of firms felt that holiday allowance was too generous, while one in four were thinking of reducing paid holiday in order to save money and increase productivity.
The study showed that bosses are thinking of cutting leave by an average of four days a year while more than a third of employers are considering offering additional unpaid leave to employees.
Dominic Grinstead, Managing Director at MetLife UK, said: “Employers are starting to question the overall value of their employee benefits package and paid holidays are clearly an expensive part. The ongoing UK economic recovery will rely heavily on small and medium-sized enterprises, and they need to contain costs.”
However, an employment law firm has warned that workers are legally entitled to a minimum of 28 days holiday per year, including bank holidays and any business offering below this is walking a legal tightrope.
Reducing staff holiday allowance is no easy task as contracts have to be rewritten and a consultation process with staff has to take place. There is also a risk of damaging staff performance in the workplace so it is important that any holiday cuts are justified and not just seen as a cost-saving exercise.
Angela Baron of the Chartered Institute of Personnel and Development warns that any money saved in reduced entitlements may well be lost due to decreases in performance and productivity.
“If you work an individual too hard, their productivity drops. We would much rather see companies looking at ways to maximise productivity by reducing stress or adding to their skills,” she explains.
The research also took into account the reaction of employees, with more than a third revealing that they would be open to a reduction in the amount of leave they receive but only if they were given a pay rise in return.
However, only 8% of the employees who took part in the survey feel confident that they will receive a pay rise in the next 12 months. Nearly two thirds said they thought a rise was unlikely, and 28% of staff said they had not received an increase in pay in the last two years.
Despite this it appears that many employers are warming to the idea of staff benefits with 42% of employees saying they have been offered flexible working opportunities, while 25% revealed that their employers have suggested increasing pension contributions.
Photo by Katy Warner – CC
