Holiday pay

Martin Brewer - Mills & Reeve
Online advisor - 92 posts

Catherine, for the pro rata calculation of holiday pay you first need to work out how you calculate the holiday pay of full timers. Once you know that you will be able to calculate the holiday pay of part timers pro rata to that of full timers by looking at the relative working time of these employees.

For new starter and leavers may I suggest as a starting point you look at regulation 15A for the former and regulation 14 for the latter of the Working time Regulations (WTR). This sets out how you do the relevant calculation (it relates obviously to the WTR annual leave entitlement but the calculation is useful in any event).

The WTR should be available on line.

Term time calculation issues can be horribly complex because so much depends on what is in the contract, when holidays may be taken, how you classify non-term time which is not otherwise holiday etc. I doubt that this question can be answered in any useful way in abstract. In my experience employers have tended to pay term time workers in one of two ways.F

First, pay them only during term time. Holiday pay is limited to 4 weeks to be taken in non-term time. Holiday pay is a normeal weeks pay.

Second, calculate the term time pay as a whole, but rather than pay it during term time only average it out and pay it over the whole year. This enables employees to receive regular pay throughout the year rather than have periods of zero income. Holiday pay is still the weekly pay based on the weekly pay over the year (not what would be the higher weekly term time pay).

How you draft the contract is vital so please take some advice.

Martin Brewer

Anonymous

Can anyone help a new business. I am employing a person for 1443 hours in a 12 month period. They have to work on Sundays and Bank Hols etc between March 12th to Oct 29th.
How much holiday (in hours) do they get?

Martin Brewer - Mills & Reeve
Online advisor - 92 posts

Ian, under the Working Time Regulations an employee is entitled, as a minimum, to 4 weeks paid annual leave each year. For this purpose what is a "weeks leave" depends upon the working pattern. So for example, if a person works 3 days per week then their "4 weeks leave" is 4 weeks of 3 days (this is why it's a mistake to talk about 20 days leave under the WTR. It could be as little as 4 days for someone who works 1 day a week).

Pay for the leave is determined by regulation 16 WTR which says that the employee gets "a weeks pay" for each week of leave. A weeks pay is determined by looking at sections 221 to 224 of the Employment Rights Act 1996. The weeks pay depends upon whether the employee has normal working hours, whether the work at different times of the day etc. You will need to work through this to determine what is a weeks pay in your particular circumstances.

Paul Basham
Member - 2 posts

On working out the holiday pay for full time workers on a straightforward basic pay package, do you use 261 or 253 days per working year to pro-rate when someone leaves or joins? I have read the working time directive guidance and it is not clear anywhere. Any thoughts appreciated.

Paul Basham
Member - 2 posts

- for clarity, do you pro-rate including or excluding bank holidays in your calculation?

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Paul

The easiest way to calculate outstanding holiday pay is to divide the annual leave entitlement by 12 (for the months of the year) and then multiply by the number of months (normally complete months)of that leave year they have worked or will work. For example, 20 days divided by 12 = 1.66 x 7 =11.66 rounded up to 12. The employee is then entitled to 12 days pay (less any holiday they have already had in the case of a leaver).You do not include bank holidays in the calculation as they are paid at the time that they occur in the calendar.
Hope that helps

sarah skyrme
Member - 2 posts

I have employees that vary their working days during a week. How do i work out their holiday entitlement?

Darren Sherborne - BPE Solicitors
Online advisor - 19 posts

Simply average their working hours over the 12 weeks prior to their holiday.
So, add up each of the hours worked every week for 12 weeks, and then devide that by 12.
If they don't have 12 weeks service, you must use the weeks available to you.
If there is a holiday or sickness in that period, you ignore that week.
I hope thats of some help.

Brian Deazeley
Member - 5 posts

Can some kind soul give me advice on calculating holidays for full time night shift employees pro rata to the day shift employees. The nightshift work 35 hours per week and day shift 37.5 hours per week. I have been advised that I cannot apply the pro rata principle as it is 2 different employment contracts and the night shift employees are full time.

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

If you define full time for your night shift workers as 35 hours, then it is irrelevant what you define as full time for your day workers. So your adviser is quite right, if the employee works 35 hours, then they are full time and they are entitled to the full amount of holidays.

Debbie Smith
Member - 5 posts

Part-time workers and holidays.

Currently our part-timers have set days i.e. tues, weds, thurs Are we required to pay them for bank hols even if this is not on a 'normal' working day.
For info: they are entitled to 25 days leave (pro-rata) this does not include bank hols.

Advice much appreciated.

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Hi Debbie

This is still a slightly grey area. It still appears to be the case that you only need to pay part timers for bank holidays when they fall on their normal working day.

The rule is that they must not suffer detriment by being a part time worker.

Therefore if you currently give everyone 25 days plus bank holidays, then provided the part time employees receive pro rata entitlement for the 25 days, plus the bank holidays if they normally work them, then you should still be within the law.

However, keep an eye on the changes - a future tribunal might disagree!

Brian Deazeley
Member - 5 posts

Pro Rata Holidays Night Shift/Day Shift

I thank Jayn for her response to my question and would ask is there any legislation that prohibits my calculating night shifts holidays pro rata to day shift or is it just good practice.

Brian

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Hi Brian
In your question you stated that the night shift workers were classed as full time even though they worked 35 hrs. Therefore you would be in breach of their employment contracts if you classed them as part time just for the purposes of calculating annual leave.

ELISABETH FISHER
Member - 4 posts

If an employee leaves half way through the month and they are normally paid a 12th of their annual salary, how would you calculate their final pay, a) divide the number of days worked in that month by the number of possible working days in that month and pro-rata the normal 12th by that or b)divide the annual salary by the annual number of working days and multiply that by the amount of days worked in the final month?

Gillian Nightingale
Member - 175 posts

Method b: Take 52 weeks x 5 working days (assuming a full-time employee), which gives 260 working days per year, divide the annual salary by 260 to give you a daily rate per day, then multiply this by the number of days they have worked in the month in which they leave.

If you calculate using option a) this could result in different amounts being paid to two employees for example who work the same number of days in their last month but leave in different months - their pay would depending on the number of days in the month in which they each leave.

Karen Jhnson
Member - 3 posts

Can anyone help please? We have a memeber of staff who works on average 39 hours a week during term time and 25 hours a week during school holidays. How do I work out their holiday pay?

John Smith
Member - 1 post

Hi There,

Am I correct in not updating my employees annual leave entitlement?

In the employees contract, it states 20 days in addition to bank holidays, but can't I now reduce their annual leave since the 24 can include bank holidays, or do i now have to provide 24 days + bank holidays?

thanks

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Hi John
If you currently give employees 20 days plus paid bank holidays then you do not need to change anything. You cannot now reduce the annual leave in the contracts. In due course the statutory entitlement will catch up with you anyway but you need to make it clear that the entitlement includes bank holidays.

jim wayne
Member - 3 posts

I have an employee who works permanent days, 6-2. He has recently agreed to work a new night shift we are initiating from Monday next, 4 nights a week. The department next door have staff who work permanent evening shift for a 15% allowance added. Our employee asked them if they got shift allowance when taking earned leave/holiday. Upon learning they do NOT get this, he then claimed this was illegal and refused to sign a contract to do permanent nights unless his holiday was paid at the same rate as permanent nights, ie with the 25% night allowance included. The company pays permanent shift employees at only BASIC day rate when on holiday.
Which of us is correct please?

Niki MOnk
Member - 2 posts

Hi guys,

HELP!!!
I have staff that work 3 days a week but only 38 weeks a year, does that still entitle them to recieve 4.8 weeks holiday???? wasnt sure on the whole pr rata thing for term time staff

Help please!!

Niki

Kevin Brown
Member - 116 posts

Jim
I think you have a contractual issue here and, as long as you don't breach minimum wage regs, you'll need to negotiate. Presumaby the shift allowance is there as an incentive or to compensate for people working unsocial hours. By that I mean an addition to a basic rate of pay paid to day shift workers. I'm not being facetious but you could suggest that if your employee is also prepared to take his holidays between 10 p.m. and 6 a.m. he might have a case. (Of course, you could always set the precedent ......)

jim wayne
Member - 3 posts

Well sections 221-224 of the 1997 employment act seems to back his claims. It specifically mentions shift allowance, or average of, should be paid in holiday pay. As holiday pay is supposed to represent an average of the 13 weeks' earnings prior, and he has worked 13 weeks of nights, he should get it by his logic. Also, he IS effectively taking his holidays between 10pm and 6am, as he IS booking that actual shift/hours off, as these are now his permanent hours.

To simplify, imagine if the NHS or Post Office told their employees they would NOT get shift pay in their holiday pay!

The problem I also haven't added yet, is that we have got many employees on alternate weeks 6-2pm (NO shift allowance paid) 2-10pm(15% paid) and this employee says we should pay them 7.5% on their holiday pay, and that he finds it bizarre we don't simply pay employees working THOSE hours the same every week (ie. 7.5%) including in their holidays. I must admit, it seems daft we pay employees 15% one week and nothing the next, then mess about taking 1 days shift allowance off them when they take a 2-10pm shift off, or a bank hol falls on their 2-10 shift.

The complainant states we are getting "the benefit of permanent shift workers from our side, while treating their shift benefits as 'casual' their side." I have some sympathy with that, and he has left it alone now, stating that when he finishes employment with us, he will officially request back-payment of this money, and if we refuse he will retrieve it through the tribunal system, and says he will certainly win. The worrying thing here, is that the company as said before has been doing this to day/evening workers for 2 years, so IF we are in the wrong we will be hit with a big bill for backpaying all the OTHER shift workers in this fashion for 2 years plus.
I am seriously worried he is right, the more I think about it.

sheena farenden
Member - 88 posts

Niki
Your staff that are part-time are entitled to pro-rata holiday. I cannot remember exact calculation rules but I had a term-time worker who worked 7.5 hours per day. She was paid 12 months of the year as working 6 hours per day therefore her Annual/Bank Holiday leave was calculated on the basis she worked 6 hours per day. This nwas calculated and used as hourly rates as on a Bank Holiday she would only be credited with 6 hours even if she should have worked 7.5 we also work flexi time so she usually made up the difference with this.

Even if your workers are not paid in this way I assume you could calculate using this method. However her dates and figures etc could vary year by year due to term-time worked, so leave could be calculated each year to confirm. It could be pointed out to her leave id calculated on apro-rata basis and could be subject to slight variations due to exact time worked.

sheena farenden
Member - 88 posts

Brian

If your employees work full-time whatever the hours are they receive the appropriate amount of leave. For instance both a day and night shift worker book off a shift as leave - where is the problem one is booking off a shorter shift but that is all he is expected to work.

Be very careful you could end up with a big problem here. Why would you want to cause upset like this check contracts carefully you may find that at some point the reduction in hours was made contractual in lieu of shift pay or general increase in wages.

My husband last firm allowed them a slight reduction on nights as no catering facilities were provided at night and they were not allowed off site. They therefore had to prepare food themselves where the day shift had theirs prepared for them.

Carol Jones
Member - 3 posts

I have an employee who has been served notice for redundancy. As a part-time worker can I apply the redundancy calculation on basic salary or do I have to include the weekly shift allowance?

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Carol

Part time workers should not be treated any differently to other employees. You should be calculating on their 'normal' pay. So if they normally receive a shift allowance, then you should include that when looking at their salary.

Carol Jones
Member - 3 posts

please can someone tell me if shift pay should be taken into the calculations when making someone reduntant. The employee being made redundant has received shift pay for 100% of their time in this employment, but now is being told that redundancy pay will only be worked out on their basic salary minus the shift allowance. Over a period of 8 years this is a lot of money to lose out on. Is this allowed.

James Fairchild
Member - 357 posts

Janet, on the face of it yes. But work your holiday entitlement in hours rather than days. By statute, you have to get 24 holiday days (rises to 28 in October) and a day is based on the typical day that you work (i.e. 3 and a bit hours in your case).

Carol - no easy answer, it depends on the terms of the contract, how often it occurred, whether discretionary, etc.

Try www.armchairadvice.co.uk/forum for employee-related issues instead.

James Fairchild
Member - 357 posts

Janet, on the face of it yes. But work your holiday entitlement in hours rather than days. By statute, you have to get 24 holiday days (rises to 28 in October) and a day is based on the typical day that you work (i.e. 3 and a bit hours in your case).

Carol - no easy answer, it depends on the terms of the contract, how often it occurred, whether discretionary, etc.

Try www.armchairadvice.co.uk/forum for employee-related issues instead.

Jane Davis
Member - 19 posts

Comment removed by request of member

Lisa Dormon
Member - 25 posts

We had a similiar situation with a part time worker.

We agreed that there are 8 bank holidays in a year (Jan to Dec holiday years work best, because of Easter moving about). Then work out pro rata what the bank holiday Entitlement is.

So someone working only 2 days a week receives 2/5ths of the value of bank holidays added to their holiday entitlement. So if FT you get 25 days holiday plus bank holidays, a PT 2 day a week person would get 10 days plus 3.2 days, and a pt 3 day a week person would get 15 days plus 4.8. Then when there is a bank holiday on the day they would normally work, a day is deducted from their holiday entitlement.

That way the bank holidays were fairly applied across the board.

Does anyone else have a way they apply bank holidays.

Justin Bentley
Member - 26 posts

Recent legislation changes say that all workers are currently entitled to 4.8 weeks holiday (equating to 24 days for a person working 5 days per week) increasing to 5.6 weeks (28 days) on 1 April 2009.

This means that somebody working two days per week is entitled to 9.6 days holiday per year irrespective of whether their normal working day is a bank holiday.

The irony is that as the majority of bank holidays fall on a Monday, this puts part time workers who normally work on a Monday at a disadvantage, as the business needs of being closed on bank holidays dictates when they use their holidays.

Lin Cuff
Member - 1 post

Staff at a Before and After Club at a Infant School receive 24 days holiday, we are flexible and they are allowed if they do not wish to work they do not have to. My problem is when it comes to calculating holiday pay they want me to skip over the week they chose not to work so that they dont loose out. I refuse because we have loyal staff who work only taking time off for holidays and if I skip over weeks there entitlement would be the same as somone working every week. Hope it makes sense but am I right.

Kelly
Member - 3 posts

Hello,
I have an employee who works tues, wed thurs and fri on Tues & Wed its 10am-5pm on Thurs & Fri she works 10 -6pm she has said i have not calculated her holiday pay correctly and frankly i am finding tghe info all a bit of a mindfield! , can soemone clarify and explain what she is owed so i am in the right
Thanks !

Jennifer Chapman
Member - 31 posts

I'm terribly confused about Bank Holidays for part-timers!

At our company all F/T staff get 25 days + BH's = 33 days in total. That is simply pro-rata'd by comparing the P/T workers hours to the normal F/T hours and that's what you get. So if you would normally work on the day a BH falls, and are P/T, you have to use your holiday to actually take that BH off - however you have no choice in the matter as the company closes on all 8 of the BH's. It's sort of OK OK if you never work Mondays anyway but not if you have any other day offalthough at Xmas you would nearly always get caught out by this as it moves every year. And of course there's Good Friday too. And say you worked 4 days a week full time - you then have to take a full days holiday (7.5 hours) for all the BH Mondays - when you CAN'T work anyway.

This stops many of our workforse applying for shorter hours or less days. OK you can say well you get 52 extra days holiday cos you don't come in any Monday or Friday or whatever day you don't work - but the person who has Mondays off effectively gets less holiday than the person who has Wednesday off, or Friday! - this surely isn't right when they are all potentially working the same hours each week?

So according to our procedure a 4 day week gives you 80% of (33 x 7.5hrs) = 247.5 hrs which = 198 hrs. NO BH this year happens to fall on your day off, so reduce that by (8 x 7.5) = 60 leaving you with 138hrs = 18.4 days. Whereas 80% of 25 days = 20 days. The person who has Mondays off 'anyway' doesn't have to use their Holiday Entitlement for BH Monday so in effect they gain at least 3 days on you EVERY year. And that surely can't be right either - unless you make every P/T person also use 7.5 hours for each BH whether they fall on their particular day off, or not.

And if you work less hours some days than others presumably the trick is to make every holiday period only the days when you DO work P/T thereby appearing to get more days holiday in a year than anyone else LOL

It could work out alright and be swings and roundabouts over a 20 year period or something - but really! it's FAR too complicated ! One employee negotiated 'same hols as previous employment' ie more than 25 days PLUS BH's on joining us and despite our being taken over by a larger co about 3 years ago, steadfastly declines to accept the new contract of employment - her other option being in effect 'Bye, folks' - and the company NEEDS her, and would in effect be much the poorer for losing her ! LOL

Peter Grundy
Member - 5 posts

Kelly,
Taking a very simplistic view, your employee works 30 hours per week. You need to pro rata this with your normal full-time employees.
Say your normal full time employees work 40 hours per week and get 28 days holiday (inc. b/h), then the person in question should get 30/40x28 = 21 days.

Hope this helps.

Roz Abbotts
Member - 1 post

I am trying to work out the annual holiday entitlement of my staff who have started with me part-way through a leave year (01/01-31/12). Their contracts state 28 days (inc BH) as the annual entitlement (Pro-Rata for PartTime). Is there a simple equation for doing this?

I know for a full annual year the equation is Y x 5.6 where Y=Weekly Hours, so what is it for a part-year??

sanita riherte
Member - 1 post

hi,

i would like to know how calculate holiday money for part timers, if they work
1 t o2 days per week and different hours every week, sometimes it would be 5 hours per week, sometimes 12hours per week..
i have 3 part timers who work only three weeks for this company, do they entitle to have any holiday pay if their ???

thanks!!!

Lisa Dormon
Member - 25 posts

If it varies that much, and isn't consistent could you not say:-

If a full time persons holiday entitlement is 25 days plus 8 days for bank holiday, so a total of 33 days, could you not divide this into an hourly amount. eg, 33 days for a F/T person working 37.5 hours for 52 weeks of the year = 1950 hours. divide 33 into 1950 = 0.016923 of holiday for each hour worked. They can then accrue their holiday with their hours. They would need to work for 59 hours to be entitled to 1 days holiday.

I'm not an expert on payroll, and there may be a very good reason why you can't just add an amount to their salary for the holiday. Eg, paid £10 per hour, you add 16.923 pence per hour worked to cover the holiday value.
You could easily show this amount separately on any payslip.


Not sure this helps, but it seems logical to me.

Regards
Lisa

Brian Deazeley
Member - 5 posts

I think Lisa Dorman's post should read 'divide 33 by 1950 = 0.016923'
Anyways what is a days holiday? The pro rata method of calculation for part time workers should be used unless it is 'inappropriate' is what the legislation states. Pro rata works fine for part time workers who work less or equal to the daily hours of full timer. But what about a part timer or a night worker who works longer daily hours but a shorter working week than a full timer say 3.5 days/ shifts at 10 hours per shift = 35 hours .
Pro rata would work out at 35 divided by 37.5 x 33 = 30.79 days round up 31 days. Now that is hunky dory until a full-time worker complains that the part time worker/night worker is getting 310 hours holidays (31 x 10) compared to their 247.5 hours holidays (33 x 7.5).
Ok lets work it out in hours then says you so again in pro rata 35 hours divided by 37.5 hours x 247.5 hours = 230.9 hours (231 hours rounded up) for our part timer which equates to 23.1 days. (231 hours divided by 10 hours). Brilliant says you, not likely says the part time worker and the night worker our days holiday is 10 hours and we are entitled to 31 days.
So I say again what is a days holiday as opposed to holihours or holishifts?? Pro rata is obviously not appropriate in this case but as long as your entitlement equals or exceeds the legal minimum then it is purely a contractual matter between you and the employee so I would suggest going back to the good old days when open discussion and compromise was reached by negotiations rather than getting in knots over pro rata calculations. Your thoughts please.

David stanistreet
Member - 4 posts

I have a hairdressers, the shop opens Tuesday to Saturday, therefore my staff have Sunday and Monday as their days off.
On Bank holidays, am I expected to pay them or time in loo for this day ???? or neither as its their day off ?? please help solve this dilemma.....

Jayn Bond - Workplace Law Network
Online advisor - 90 posts

Hi David
The answer is actually about ensuring your staff receive the correct amount of holiday. At the moment full time staff should have a minimum of 24 days paid annual leave (including any paid bank holidays) and as from 1 April 2009 it will be 28 days.
At the moment your staff are not receiving a paid holiday when they are off on a Bank Holiday Monday, as this is their normal day off anyway. But they are probably having a paid days holiday on other Bank Holidays such as Good Friday.
So you need to make sure that they have a total of 24 days paid holiday, including those bank holidays that do not fall on a Monday, and if they are not then you need to increase their holiday allowance to recognise that Bank Holiday Mondays are no different to their normal days off.
I hope that makes sense

David stanistreet
Member - 4 posts

Hi Jayn,
many thanks for the excellent quick response, I now understand this totally, your very kind, thanks again,
David

Patrick Barry
Member - 1 post

Our Company has several different shift patterns which for the purpose of resolving holidays is worked out in hours, this seems agreable with everyone. Recently we implemented the same policy to bank holidays, so rather than giving a whole shift off for each bank holiday we have added 64 hours (8 holidays multiplied by their daily pro-rata hours) to their holiday entitlement. Obviously the normal day shift has not been affected but the 12 and 10 hour night shift employees have and do not seem to be happy with our solution of allowing them the bank holidays off so long as the difference between the 8 hours we give for each bank holiday and their actual shift is made up by either: working extra shifts; or using holiday entitlement. In essense one night shift needs to work an extra 36 hours whilst the other an extra 15 hours. Are we implementing this correctly?

Justin Bentley
Member - 26 posts

It depends on whether the night shift workers also work a 40 hour week on average (such as working four 10 hour shifts per week).

If they work 40 hours per week, then yes you are correct. The change to cover bank holidays is that every worker will get 5.6 weeks holiday (4.8 weeks as the interim step). Note it is set in weeks, not days or shifts. This method does create some people who benefit more than others, but it is the way that the legislation has been written.

If your night shifts work more than 40 hours per week, then you would need to increase their allowance proportionally.

John Clark
Member - 1 post

This seems an easy one and i think I am thinking too hard about it.

Am I correct in thinking that if an employee works 22½ hours per week, Monday to Friday and the same hours each day, they still get their full leave entitlement?

Say they were entitlted to 25 days per year they get 25 of 'their' days, the only change would come was if we were paying in lieu of a day when we'd only pay them for the actual hours they work ?

A colleague has said annua leave is always pro-rata'd based on actual hours against a normal working week but I think this is the exception ??.

Justin Bentley
Member - 26 posts

Technically you are both correct. "Pro rata" means basically reduced in proportion, this could be a reduction in weekly working hours by working less days per week, or the same number of days but less hours per day.

What you need to look at is to make sure that everybody's holiday entitlement allows them the same length of time off.

John - In your example above, the employee working 22.5 hours per, you are correct that they would still get 25 days holiday, and that the daily rate of holiday pay is 4.5 hours pay. In this case the daily rate of holiday pay is "pro rata" when compared to the daily rate of holiday pay for a full time employee.

I hope this helps.

Brian Deazeley
Member - 5 posts

In response to Patrick Barry's post you will have to be careful if your shift employees decide to work the extra hours as you will have to pay them extra for those hours otherwise you leave yourself open to a breach of contract for unlawful deduction from wages. Asking employees to work extra hours is a fundamental change to a contract of employment and not just a variance.