Bank Holidays vs Public Holidays: What UK Employers Need to Know

If you run a small business, “bank holidays” can feel like they come with a mix of practical headaches and legal uncertainty.

Do you have to close? Do you have to pay people extra? Can staff insist on having the day off? And what’s the actual difference between a bank holiday and a public holiday anyway?

The good news is that once you separate the terminology from your legal obligations, this area gets a lot clearer. In this guide, we’ll break down what the terms mean in the UK, what the law actually requires, and how to set expectations in your contracts and policies so you’re protected from day one.

What Is The Difference Between Bank Holiday And Public Holiday?

In everyday UK usage, people often use “bank holiday” and “public holiday” to mean the same thing: a day when lots of businesses close and many workers have time off.

But strictly speaking, there is a difference in where the terms come from and how they’re used:

• Bank holiday is a legal/official concept. It usually refers to holidays declared under the Banking and Financial Dealings Act 1971 (and related arrangements), which historically affected banks and financial institutions.
• Public holiday is more of a general description. It’s commonly used to describe a day that is widely observed as a holiday by the public (including bank holidays). In some parts of the UK, it’s the more common phrase.

So if you’re searching for the difference between a public holiday and a bank holiday, the practical answer for employers is:

In most workplaces, “public holiday” and “bank holiday” end up meaning the same days in practice - but your obligations as an employer usually come down to statutory holiday rules and what you’ve agreed in your employment contracts, not the label used.

What matters most is what the law says about annual leave and what your contracts and policies say about:

• whether bank/public holidays are included in holiday entitlement or granted on top;
• whether your business closes on those days;
• what happens in industries where staff are expected to work them (retail, hospitality, healthcare, logistics, and so on).

Are Bank Holidays A Legal Right To Time Off In The UK?

This is the point that surprises a lot of business owners (and employees):

There is no automatic statutory right to have bank holidays off work.

Instead, most workers are entitled to statutory paid annual leave under the Working Time Regulations 1998:

• 5.6 weeks’ paid holiday per year for full-time workers (pro-rated for part-time workers).
• For someone working 5 days per week, that’s 28 days.

Those 28 days can be handled in different ways depending on how you structure your holiday rules:

• Option A: “20 days plus bank holidays” (bank holidays are given in addition).
• Option B: “28 days inclusive of bank holidays” (bank holidays come out of the 28-day allowance).
• Option C: A different enhanced entitlement (e.g. 30 days inclusive of bank holidays).

Because of this, one of the most important clarity points in your documentation is whether holiday entitlement is inclusive of bank holidays or whether bank holidays are in addition.

And if you’re employing staff, it’s worth getting the basics right in a properly drafted Employment Contract so everyone knows where they stand.

How Do Bank Holidays Affect Holiday Entitlement (And How Should You Draft It)?

Bank holidays become tricky for small businesses because “standard” assumptions don’t fit every industry.

If you operate a shop, café, salon, care business, or any customer-facing service, you might need staff working on bank holidays. On the other hand, if you run a professional service office, you might close as a matter of routine.

The key is to choose a clear approach and then bake it into your employment documents and holiday process.

Approach 1: Holiday Entitlement “Plus Bank Holidays”

This approach is common for businesses that close on bank holidays.

Typical wording (conceptually) might look like:

• “You are entitled to 20 days’ paid holiday per holiday year plus recognised bank/public holidays.”

Practical consequences for you as an employer:

• Holiday entitlement is easy to understand.
• You’ll need to track bank holidays separately from annual leave requests.
• You must consider what happens if someone is required to work a bank holiday (e.g. by agreement, rota, or business need).

Approach 2: Holiday Entitlement “Inclusive Of Bank Holidays”

This approach is common for businesses that operate on bank holidays or where staffing needs vary.

Typical wording (conceptually) might look like:

• “You are entitled to 28 days’ holiday per holiday year inclusive of bank/public holidays.”

Practical consequences:

• It’s often easier to manage across different working patterns.
• Employees can choose whether to use their leave on bank holidays (subject to your approval process and operational needs).
• You still need fair rules for part-timers, shift workers, and irregular hours (pro-rating and calculating leave correctly is crucial).

Approach 3: Enhanced Entitlement

You can offer more than the statutory minimum. Lots of small businesses do this as a retention tool (especially where competition for staff is tight).

If you offer enhanced entitlement, be careful you still define:

• whether bank holidays are included or additional;
• how leave accrues and carries over (if at all);
• whether you can require employees to take leave on certain dates.

On that last point, employers can control when annual leave is taken in many situations, provided you follow the right notice rules and act reasonably. If this is relevant to your rostering, seasonal closures, or peak periods, it’s worth understanding your options around dictating holidays.

Do You Have To Pay Extra For Working A Bank Holiday?

Another common myth: that staff are automatically entitled to overtime rates or “time and a half” for bank holidays.

There’s no general legal requirement to pay extra simply because it’s a bank holiday.

Whether you must pay an enhanced rate depends on:

• the employment contract;
• any staff handbook/policy you’ve incorporated into the contract;
• custom and practice (i.e. what your business has consistently done over time, which can sometimes become an implied term);
• any applicable collective agreement (more common in larger workplaces, but it can still happen).

That said, even if you don’t pay enhanced rates, you still need to meet National Minimum Wage requirements and comply with working time rules (rest breaks, maximum hours, and paid holiday). The high-level framework is set by the Working Time Regulations, and getting your systems aligned with those duties can prevent a lot of disputes later.

Day In Lieu (TOIL) For Bank Holidays

Instead of paying extra, many businesses offer time off in lieu (TOIL) when someone works a bank holiday - especially where a business is normally closed or where working bank holidays is an “exception” rather than the norm.

If you want to offer TOIL, you should be clear on:

• who approves it;
• when it can be taken;
• whether it expires if not used by a certain date;
• whether it applies to all staff or only certain roles.

It’s also important not to treat TOIL informally (e.g. “just take a day sometime”). That’s where misunderstandings happen. If TOIL is part of your approach, it helps to have a consistent rule for day in lieu so your managers and staff are applying the same standard.

What Happens If A Bank Holiday Falls On A Non-Working Day?

This is where bank holidays can cause real confusion in small businesses, particularly if you employ:

• part-time staff working set days (e.g. Mondays and Wednesdays only);
• shift workers on rotating patterns;
• staff who normally don’t work Mondays (when many bank holidays fall).

If your full-time staff get bank holidays “off” (because the business closes) but your part-time staff don’t normally work that day anyway, you can accidentally create an inequality if you don’t pro-rate fairly.

For example:

• A full-time employee works 5 days and benefits from most bank holidays falling on their working day.
• A part-time employee works Tuesday to Thursday and rarely benefits from bank holidays.

If you provide “plus bank holidays” entitlement and don’t adjust for part-time patterns, the part-time worker may effectively receive less paid leave overall, which can create employee relations issues and potential legal risk (particularly around fairness and discrimination if patterns align with protected characteristics).

That’s why it’s important to have a consistent method for what happens when a non-working day falls on a bank holiday, including whether you:

• pro-rate bank holidays into an overall holiday pot;
• offer an alternative day off;
• or use “inclusive of bank holidays” entitlement for everyone to simplify administration.

There isn’t one perfect approach. The right answer depends on how your business operates - but you do need an approach.

Practical Steps For Employers: Policies, Rostering, And Avoiding Disputes

Once you understand the difference between bank holidays and public holidays (and the fact the law focuses more on total annual leave than the label), the next step is operational: setting rules that actually work for your business.

Here’s a practical checklist you can apply right away.

1) Decide Whether Your Business Will Close On Bank Holidays

Sounds obvious, but this drives everything else. If you close, you’ll usually want leave rules that automatically allocate those days. If you stay open, you’ll need a clear rota system.

Industries that commonly stay open include:

• hospitality (restaurants, cafés, bars);
• retail;
• security and facilities;
• care and health services;
• delivery/logistics.

2) Make Holiday Entitlement Crystal Clear In Writing

Bank holiday issues often become disputes because the contract is vague. A well-drafted contract should make it easy to answer:

• Is the entitlement inclusive of bank/public holidays or not?
• Which bank holidays apply to the role (this can vary depending on whether the employee works in England and Wales, Scotland, or Northern Ireland)?
• If someone works on a bank holiday, do they get extra pay, TOIL, or nothing extra?
• What notice is required to request leave?
• Can you refuse leave requests due to operational requirements?

3) Watch Out For “Custom And Practice” Problems

Small businesses often “do what they’ve always done.” The risk is that if you consistently provide a benefit (like paying time-and-a-half on bank holidays), employees may start to treat it as an entitlement - even if it’s not written down.

If you want flexibility, it’s better to define bank holiday arrangements explicitly, rather than relying on informal habits.

4) Plan Rosters Early (And Communicate Early)

Bank holiday staffing issues get worse when staff only find out last-minute. A simple early-communication rule can prevent friction, for example:

• Publishing bank holiday rotas X weeks in advance;
• Having a fair rotation (so the same people aren’t always scheduled);
• Allowing staff to swap shifts subject to manager approval.

5) Double-Check Working Hours And Rest Compliance

Bank holiday periods can tempt businesses into longer trading hours or heavier shifts, especially if demand spikes.

Make sure your working pattern stays compliant with rest and maximum hour rules (and that any opt-outs are handled properly where relevant). Again, the baseline rules come from the Working Time Regulations.

If you’re paying overtime or offering TOIL, keep records so you can show you’ve managed working time fairly.

6) Be Consistent Across Your Workforce

Consistency is a big risk-management tool. The more consistent you are, the less likely you’ll face:

• grievances about unfair treatment;
• holiday pay disputes;
• confusion when managers change or your business grows.

As a general rule, try to avoid “special deals” unless you document them properly (for example, in a written variation or side letter) so you don’t unintentionally create a precedent for everyone else.

Key Takeaways

• In practice, the difference between a bank holiday and a public holiday in the UK is mostly about terminology - your obligations as an employer usually depend on statutory annual leave rules and your employment contract terms.
• Employees don’t have an automatic legal right to take bank holidays off; what matters is that they receive their statutory paid annual leave entitlement under the Working Time Regulations.
• Decide whether holiday entitlement is inclusive of bank holidays or in addition to them, and make that position clear in writing to avoid disputes.
• There is no general legal requirement to pay extra for working a bank holiday, unless the contract or established practice says otherwise (but you can offer TOIL if you want a workable alternative).
• Be careful with part-time staff and shift patterns, especially where a non-working day falls on a bank holiday - pro-rating and consistency are key.
• Strong documentation (including a properly drafted Employment Contract) and clear scheduling processes are some of the easiest ways to reduce bank holiday friction in a small business.

This article is general information only and not legal advice. If you’d like advice on your specific situation, get in touch with a lawyer.

If you’d like help setting out bank holiday rules clearly in your employment contracts or workplace policies, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.