Hospitality businesses will no longer be allowed to include bank holidays as part of their employees' annual leave if government proposals to increase workers' holiday entitlement from 20 days per year to 28 are approved.
The Government said up to six million workers would benefit from an extra eight days holiday each year under the plans, which were officially announced today.
Statutory annual leave entitlement would be increased in two stages, rising from 20 to 24 days on 1 October 2007, and from 24 to 28 days on 1 October 2008.
Research by the Department of Trade and Industry (DTI) found that groups standing to benefit most from the changes include women, part-time and low-paid workers, and workers from minority ethnic communities.
The DTI is launching a second public consultation on the implementation of the changes.
The CBI welcomed the phased introduction of the new entitlement but warned the cost could hit employers hard. The British Hospitality Association has previously warned that the changes could cost the UK hospitality sector £240m.
John Cridland, CBI deputy director-general, said: "This is good news for those staff who will see their annual leave increase but it will cost employers £4b a year.
"With the Government considering raising the national minimum wage in 2007, these extra costs must mean there is a smaller wage increase. Ministers must be mindful of hitting employers with a double whammy of extra costs."
Employers would also like the ability to exchange the extra leave for extra pay if both sides agree, Cridland said.
Jim Fitzpatrick, minister for employment relations, said: "Most companies already recognise that good holiday provision makes good business sense. Holiday entitlement can be a key factor in recruiting and retaining staff.
"We've worked closely with business and have wanted to make sure that they have time to prepare for the changes."
More holidays could cost £240m a year >>By Mike Berry
This story first appeared on CatererSearch sister website PersonnelToday.com