It would be quite forward thinking to offer compassionate leave. We do for deaths etc. 

In reply to Clare Marie:

I agree with Clare Marie and Nicola, I think that some compassion should be shown employees in need of compassionate leave.  After all, what kind of numbers are you talking here, really?

As someone who has benefitted in the past from such, I think the benefits of offering a few days paid leave and then a choice after will generate more goodwill that will far outweigh negatives like cost to a business.

People have a right to grieve or attend personal business on compassionate grounds without suffering financial detriment at the hands of their employer.

They also have a right under the WTR to take annual leave as rest from work - forcing some of that respite to be sacrificed for compassionate leave feels uncomfortably like robbing with one hand to give with the other; they may well need that holiday time down the track. 

Forcing staff to take paid annual leave as paid compassionate leave could be viewed as taking advantage of workers in a time of distress, when their focus may be elsewhere and they need support, not hard choices.  Just my feelings on it.

In reply to Emily:

Then, again, you run into the problem that you have to give someone appropriate notice to take paid annual leave, which is tricky unless you are planning on eliminating their family members to a schedule.

"We're going to need you to take holiday to cover your compassionate leave in two weeks."

"What compassionate leave?"

"Don't worry. You'll find out."

You clearly wish to be seen as an employer of choice given the generous holiday allowance, so why then appear to be cheese-paring over compassionate leave when an employee is at their lowest emotionally?  You can limit this reasonably by adding a clause to say that compassionate leave is available up to a maximum of three days (inclusive of the day of the funeral) in the instance of the passing of an immediate family member (partner, parent, child, sibling) and further at the discretion of a director.  We have this in place, it is much appreciated by staff and has never been taken advantage of. Bereaved employees remember favourably support from their employers at these sad times, anything less can sometimes drive a wedge into the employment relationship and lead to issues or departure later.