Bank Holiday Rules and Additional Payments

Bank Holidays and Additional Payment

Bank Holidays

There is no statutory entitlement for an employee to have a day off on a bank holiday unless this is covered in their contract of employment.  If an employee would like to take the day off, this comes out of their 5.6 weeks holiday entitlement (4 weeks + 1.6 weeks for bank holidays) and should be agreed in advance with the employer.

There is also no legal requirement to pay an increased rate for hours worked on bank holidays unless this is also stated in the contract of employment. This is the employer’s discretion, and may not be covered by direct payments funding, so please check in advance with your funding body if you are not sure.

Bonuses

There is no obligation for an employer to give their employee a bonus, and this will not be covered by direct payments.

If an employer does chose to give their employees a bonus, it will need to be paid for from personal funds, and may be subject to tax deductions and national insurance contributions, meaning employees may not receive the full amount. There may also be employer’s national insurance contributions due on this amount which again will not be covered by direct payments funds and will need to be paid for directly by the employer.

Gifts

Be careful if you choose to give your employees a gift that you comply with all the HMRC regulations regarding PAYE liability.  Employers do not have to pay tax on a gift to their employee provided it meets all of the below criteria:

• It costs £50 or less
• It isn’t cash or a cash voucher
• It isn’t a reward for their work or performance
• It isn’t in their contract

This is known as a ‘trivial benefit’ and therefore you do not need to pay tax or national insurance, or declare this to HMRC.

These criteria are applicable per tax year, not per gift. For example, 2 separate gifts over the year costing £30 each do not meet the above criteria as you would have spent £60 over the year.

Any gift would not be funded by your direct payments.

Please see the below link for more information:
https://www.gov.uk/expenses-and-benefits-trivial-benefits