There are two key things to think about when it comes to a worker’s holiday; holiday entitlement and holiday pay.
Whilst the focus of recent case law in the past few years has related to holiday pay, this has led to a number of queries about how to calculate an individual’s holiday entitlement – how much holiday an individual is entitled to take in each leave year.
By far the most popular queries relate to calculating holiday pay for part time workers, which continues to provide a challenge for many employers.
For example, here are some basic tips and advice when working out holiday entitlement for your part time workers depending on their working patterns:
Part-time workers and working patterns
The term ‘part-time’ simply relates to an individual who works less than the company standard number of working hours.
Regardless of the number of hours worked per week, it is the working pattern that will determine the holiday entitlement.
Same hours, different work patterns, different calculations
In each of the examples, the following facts exist:
- the full-time equivalent holiday entitlement is 20 days plus eight bank holidays (the statutory entitlement, equivalent to 5.6 weeks leave per year);
- the individual works 30 hours per week
Work pattern one
Whilst this individual works part-time, as they work their hours equally over five days their holiday entitlement would be the same as the full time equivalent, 20 days plus eight bank holidays per year (or 5.6 weeks). This has proved confusing for some, so here’s why.
A full-time employee works 37.5 hours per week, 7.5 hours per day. This means that each time they take a day’s holiday, they would receive payment for 7.5 hours (subject to holiday pay rules).
However, whilst the number of days entitlement is the same, in this example, each time they take a days holiday, they would be paid for six hours. The part-time element is picked up within the amount of pay received, rather than the number of days entitlement.
Work pattern two
This individual works 30 hours per week, equal hours across four days. There are two ways to calculate the correct holiday entitlement.
1. The full-time equivalent entitlement is 5.6 weeks. This individual works four days per week. The calculation is therefore 5.6 x 4 = 22.4 days per year.
2. This can also be calculated as 4/5ths of the full time equivalent. The calculation is therefore 28/5*4 = 22.4 days.
Also, it’s worth remembering statutory entitlement must never be rounded down. As entitlement to bank holidays is already included in the calculation, if a bank holiday falls on a working day but is not worked resulting in less than the normal 30 hours being worked, the bank holiday must be deducted from the total entitlement.
Work pattern three
Given that different hours are worked on different days across the week, the holiday entitlement would need to be calculated in hours.
Remembering the full time equivalent of 5.6 weeks per year, and that the individual works 30 hours per week, the calculation is 5.6 x 30 = 168 hours per year.
In this example, the number of hours deducted from the entitlement would vary depending on the days taken. For example, if Monday and Tuesday are booked as holiday, the total deducted would be 12.5 hours, whereas if Tuesday and Wednesday were booked as holiday, the total deducted would be 10 hours.
As entitlement to bank holidays is already included in the calculation, the number of hours deducted if a bank holiday is not worked will be equivalent to the day on which the bank holiday falls.
Other working patterns
There are of course a number of other working patterns which require careful consideration in order to meet statutory and contractual requirements. These may include those who do not have regular working hours and term time workers, for example.
Having an HR IT system in place can help to automate the holiday process and take the pain out of holiday calculations.
Case law has had an impact on holiday pay and the way in which different pay elements may or may not need to be included when calculating pay. For the latest advice, please see our article ‘Holiday Pay – Are you making an expensive mistake?'.
The above is only for generic advice and guidance on how practically to deal with hypothetical scenarios surrounding holiday entitlement calculations. If you have any questions or would like to discuss your employees’ bespoke holiday entitlements, please contact Kerri Constable or Laura Cerasale.