Holiday trading: Fly with it

The writer, Richard Bach, was a firm believer in choice. ‘Allow yourself to live as you choose,’ he counselled, creating an eponymous seagull hero that decided to fly faster and higher than anyone else in his feathery family.

Choice is, or certainly should be, high on the agenda when deciding on an employee benefits scheme. Employees can contribute as much as they like to their pensions; they can spend their discounts almost anywhere; they can even choose which gym they work out at. So why can’t they choose how much annual leave to take?

In fact, more and more can. Once the preserve of public sector organisations (councils, ambulance services, NHS trusts and the like), buying and selling annual leave as an employee benefit has moved into the mainstream. Originally taken up by corporate big-hitters like PwC, it’s been adopted by companies as varied as Orange, Barratt Homes and Nationwide. KPMG ‘encourages the business to be creative in offering flexible working,’ and allows employees to buy back a hefty four weeks annual leave.

This is how it works: an employee can only sell leave as long as they keep to the statutory minimum, which, at the moment, is 20 days plus 8 public holidays. If an employee sells five days (which is the maximum most employers offer), and their salary works out at £100 per day, their annual pay is reduced by £500 and smoothed out over a year to spread the cost.

If it sounds sensible, that’s because it is. But why are we only seeing it now? Needless to say, much has changed in the last two years.

This new benefit is an additional tool for employers to avoid drastic measures like pay cuts and enforced leave by making much- needed savings on payroll and National Insurance contributions (it was widely reported that in one quarter of 2009, the 500-strong office supply firm Acco Brands made a payroll saving of over £37,000). In turn, employees have increased flexibility and control over their work-life balance. Their buyback can even absorb unplanned time off for domestic responsibilities, for example.

And it doesn’t have to be complicated, time consuming or expensive to implement. As an employer, you don’t even need a full flex benefits scheme. Buying and selling annual leave will become part of Asperity’s Reward Gateway from the Spring. So a few extra days spotting acrobatic seagulls on the south coast is nothing. Everyone’s flying high.