Employers may be allowed to "buy back" extra holiday time allotted under Government plans to increase annual leave by eight days.

The option, backed by the British Hospitality Association (BHA), was outlined in the consultation paper, Increasing the Holiday Entitlement, published last week.

The Government wants to add the UK's eight bank and public holidays to the existing statutory minimum of 20 days for a full-time employee. Currently employers are allowed to count them as part of the basic entitlement.

Commenting on the consultation, BHA deputy chief executive Martin Couchman said: "It would be a lot simpler if we stuck to the current Working Time Directive rules, which forbid any carry-forward of holidays or buy-out of days.

"However, we are inclined to support anything that makes the system more flexible."

The Government intends to add the first four days from October 2007 and has suggested four options for bringing in the second tranche. These include adding the last four days in one phase or staggering them over several years.

The BHA has estimated that the new measures will add about 450,000 extra day's holidays and could cost the industry around £190m.

• To view the proposals and download a submission form, visit www.dti.gov.uk/consultations/page30026.html. The consultation closes on 22 September and draft regulations will be published in December for a second consultation that will run to March.

By Angela Frewin