Employers who do not currently offer 28 days paid annual leave will have to increase employee entitlement by April 2009.
The government has promised up to eight extra days annual holiday per employee, with the first extra four day entitlement coming into force from October this year.
An estimated six million employees in Britain will be affected by the new regulations which will increase the minimum holiday entitlement from 20 to 24 days a year from this October, and 28 days from April 2009.
Jim Fitzpatrick, employment relations minister at the Department of Trade and Industry (DTI), said: “Businesses will benefit too – from reduced absenteeism and a workforce who are more motivated and productive.”
Part-time workers will also benefit from being entitled to the extra holidays pro-rata and employers will still be able to buy out the additional four day’s holiday entitlement introduced from October 2007 until 1 April 2009.
John Cridland, deputy director-general of the CBI, said: “The government is right to introduce the extension of statutory annual leave gradually over the next two years, a ‘big-bang’ approach would have been more painful for employers.”
However, the Forum of Private Business warned that smaller businesses that do not currently provide 28 days’ paid leave may be forced to carry out cost cutting measures to be able to implement the changes.
Rebecca Leavers, research manager of the FPB, said: “Although it is true that there will be a substantial cost for some firms in terms of reduced productivity or finding extra cover for workers on leave, the impact on smaller businesses doesn’t end there.
“There is also the administration of such a change. Contracts will have to be re-written, for example.”