The holiday season is just about upon us (hurrah!), a time for working out our holiday entitlement and how we can stretch it as far as possible!
Calculating an employee’s holiday entitlement can be tricky, especially if they work part-time or join the company part way through the year. Here’s the basics, but for more complicated situations, it’s best to seek advice from an HR professional.
Basic holiday allowance
The statutory leave allowance for almost every UK worker is 5.6 weeks’ paid holiday per year, which may or may not include bank holidays. For employees working five days a week, this equates to a minimum of 28 days’ paid holiday per year.
For part-time employees who work the same number of hours on the same days each week, they are also entitled to 5.6 weeks’ but don’t get to take the full 28 days because they work fewer hours per week.
What is pro-rata?
Holiday entitlement can be calculated in relation to the amount of holiday year the employee has worked. The annual leave is calculated based on the amount of time they have worked as a proportion of the full entitlement they have accrued. Employees accrue annual leave at a rate of 1/12 for each month worked. For an employee leaving during the holiday year, the allowance runs from the start of the holiday year to the date they leave. If they have already taken more than their entitlement, you can take the money back from their final pay packet if agreed beforehand. If they haven’t used all their holiday entitlement, you can offer them payment in lieu of holiday.
To make a pro-rata calculation for a part-time employee, multiply the number of days worked per week by 5.6. So, if the employee works three days a week, the calculation is 3 x 5.6 = 16.8 days.
What about zero hours contracts?
These workers are entitled to 5.6 weeks holiday per year but because of the flexible rather than set hours they often work, it is better to calculate their holiday allowance in hours not days. Take an average of the hours worked in the past 12 weeks to make the calculation.
Bank holidays
This can be a tricky area when calculating holiday entitlement. Some companies include the bank holidays and some don’t. The UK has eight bank holidays per year, but some employees don’t work on a Monday, when many holidays fall. There is no statutory right to not work on bank holidays, it is up to the employer to decide whether or not to allow holidays. Whatever you decide, it must be clearly set out in the employment contract.
Annual leave carried over
Carrying over leave if an employee hasn’t managed to take it all during the holiday year is at the employer’s discretion. Taking the full year’s entitlement is important for employee wellbeing but it is also seen as considerate to allow carrying over. If an employee can’t take their full year’s leave because of sickness or maternity leave, the days can be carried over and must be taken within 18 months.
To avoid the difficult situation of having many people taking carried over holiday at the same time, some employers have staggered holiday years, for example beginning each employee’s holiday year to run from the month of their birthday.
So that’s the basics of holiday entitlement, for more complex situations, please contact a friendly HR professional. For more details on CRM’s approachable accountancy services, visit www.crmoxford.co.uk or call us on 01865 379272.
