Holiday entitlement for new employees

Originally written by Jane Mason on Small Business As a small business owner, calculating holiday entitlement for new starters can feel like a daunting task – especially if you have staff who work part-time or have irregular hours. But don’t worry, once you get your head around the calculations it’s much easier than you think. Here’s everything you need to know. What does Holiday entitlement for new employees

Holiday entitlement for new employees

Originally written by Jane Mason on Small Business

As a small business owner, calculating holiday entitlement for new starters can feel like a daunting task – especially if you have staff who work part-time or have irregular hours.

But don’t worry, once you get your head around the calculations it’s much easier than you think. Here’s everything you need to know.

What does the law say?

UK law states that employees are entitled to 5.6 weeks’ annual leave per leave year, which equals 28 days for full-time employees.

This is made up of:

  • A minimum of four weeks’ annual leave as required by EU law
  • An additional 1.6 week’s annual leave which represents the number of UK bank holidays

Part-time workers are also entitled to the same leave as full-time workers proportionate to their hours worked, this is often referred to as ‘pro-rata’.

Regardless of working hours, all workers are entitled to holiday from their first day of employment.

So, how does this work?

There are two parts to holiday which are calculated separately.

  1. Calculate how much holiday someone is entitled to take
  2. Work out how much someone is entitled to be paid whilst on holiday

However, there are various types of employees, so you need to use different calculations for each.

Here’s how to do the calculations.

1 – How do you calculate holiday leave?

Full-time workers

This is very easy to calculate – all full-time workers are entitled to 5.6 weeks of holiday every year, which legally you must provide as an absolute minimum.

So, when working out holiday pay for a full-time worker you take the minimum statutory entitlement of 5.6 weeks a year and multiply it by five which gives you 28 days. If you have any employees who work six days or more, their entitlement is still capped at 28 days.

Part-time workers

Part-time workers are also entitled to 5.6 weeks holiday, so this means in practice you multiply 5.6 by the number of days they work per week to get their entitlement.

For example, if they work four days a week, the calculation is 5.6 x 4 which gives them 22.4 days. This should then be rounded up to the nearest half day making their holiday entitlement 22.5 days.

Factoring in things like bank holidays for part-time workers is where things get tricky.

What happens when an employee doesn’t work on the days that bank holidays fall?

As an employer you need to make sure all part-time employees benefit from bank holiday leave, even if they don’t normally work bank holidays. The easiest way to deal with this is to add bank holidays to their leave and pro rata it down.

For example, Company A have a holiday year running from April 1, 2020 to March 31, 2021. The eight bank holidays fall on the following days:

  • Friday April 10, 2020
  • Monday April 13, 2020
  • Friday May 8, 2020
  • Monday May 25, 2020
  • Monday August 31, 2020
  • Friday December 25, 2020
  • Monday December 28, 2020
  • Friday January 1, 2021

Samantha works three days a week on Monday, Tuesday and Wednesday and has an overall entitlement of 17 days but will find that four of those days are fixed bank holidays and therefore only 14 days of her entitlement are floating days to be taken when she chooses.

What about part time workers who work different hours on fixed days?

If this happens then holiday leave should be calculated in hours, not days, because employees could take their holidays on days they work longer.

To calculate the total leave you simply multiply their weekly hours per week by 5.6 to get their hourly entitlement.

Casual workers and employees with irregular hours workers

For employees who work varied hours holiday entitlement should be calculated on an accrual basis, because their irregular working pattern makes it difficult to predict their entitlement. This is because you cannot calculate, in advance, the employee’s annual holiday entitlement in days or hours, without knowing at the beginning of the year how many days or hours they’ll work.

Due to this your best bet based on the current law is to calculate holiday in hours using the accrual method, and review at the end of each holiday year, and at the end of a contract, to check that workers have had and been paid for the correct amount of holiday.

2 – How do you calculate holiday pay?

When your employees are on fixed hours and salary, take a week’s holiday, they should receive the same pay on payday that they’d normally receive.

This becomes much trickier when someone doesn’t work fixed or regular hours and so doesn’t receive the same amount of pay each pay day.

How do you calculate a week’s pay for more flexible workers?

If you’ve got a worker whose weekly pay varies, the holiday pay they receive will be their average pay over the previous 52 weeks worked. In those 52 weeks your worker must have been paid, so exclude any weeks where they weren’t paid.  You may therefore need to go back more than 52 weeks to ensure you cover the full period where pay was received.

3 – How do you calculate holiday pay for a new starter?

Whether you’re calculating holiday for new starters or leavers, the process is a relatively simple one. Of course, the specifics of how you work out holiday entitlement will vary according to your company’s employment contract.

This is calculating the pro-rata entitlement. You either calculate this monthly, or by the actual or working days remaining in the holiday year.

To calculate it monthly you divide the total holiday allowance by 12 and then multiply by the number of months worked. For example, 28 days holiday / 12 = 2.33 days of holiday accrued for each month worked.

However, not everyone will start or leave at the beginning of the month, so at time you will need to calculate holiday more specifically. There are two methods that can be used. The first is the actual (i.e. 365 days or 366 on a leap year) days in a year simply work out the number of days between the start date and the end of the year. Then divide this number by 365 (or 366) and multiply by 100 will give the percentage of the full year entitlement that is owed.

But it is more common to calculate holiday by the actual working days in a year (e.g. 165 days). Simply work out the number of working days between their start date and the end of the year, then divide this number by 260, multiply by 100 which again gives you the percentage.

Jane Mason is HR operations manager at Citrus HR.

Further reading

Holiday leave and pay: the law

Holiday entitlement for new employees

Source : UK Small Businesses More   

What's Your Reaction?

like
0
dislike
0
love
0
funny
0
angry
0
sad
0
wow
0

Next Article

The BCC is calling on the government to help businesses rebuild

Originally written by Anna Jordan on Small Business Optimism has grown since lockdown restrictions have started to ease, but businesses are still worried about the months ahead. The British Chambers of Commerce (BCC) has created a report outlining proposals to help businesses build back stronger. It focuses on five key areas: Manage the virus response in a way that helps businesses survive and The BCC is calling on the government to help businesses rebuild

The BCC is calling on the government to help businesses rebuild

Originally written by Anna Jordan on Small Business

Optimism has grown since lockdown restrictions have started to ease, but businesses are still worried about the months ahead.

The British Chambers of Commerce (BCC) has created a report outlining proposals to help businesses build back stronger.

It focuses on five key areas:

  • Manage the virus response in a way that helps businesses survive and thrive
  • Economic health and investment
  • Build an ambitious global trade strategy
  • Skills for the jobs of today and tomorrow
  • Invest in the places where we live, work, study and play

Let’s see what they had to say.

>See also: Sunak ignores small business pleas for more help to get through lockdown

Manage the virus response in a way that helps businesses survive and thrive

UK-wide co-ordination of virus management and recovery, ensuring consistency of approach across nations

Set out a long-term Coronavirus testing strategy so businesses can plan with confidence

Set out contingency plans for future virus response so businesses can invest in their future with confidence

Economic health and investment

Require lenders to accept requests from Coronavirus Business Interruption Loan customers for the term of their loans to be extended from six to up to ten years

Introduce a blended approach to businesses’ Coronavirus-related debt, including a student-loan style option, so firms only pay back debt accrued as a result of the pandemic when they have reached a threshold of profitability

Expand the super deduction as an investment incentive so more and different firms can take advantage of the scheme

Double the investment in start-up loans from £250m to £500m to meet anticipated demand from new business start-ups

Build on the progress to date and work with Accredited Chambers to deliver a Shared Prosperity Fund which has a clear purpose and role for business, takes account of in-depth local knowledge and which is designed and capitalised to deliver real-world improvements.

It is vital that the Community Renewal Funds are taken forward as quickly as possible. To deliver the maximum impact for regional prosperity, the government must work carefully with Accredited Chambers of Commerce and other business groups from those areas.

Finally, the UK Shared Prosperity Fund must be capitalised to match all the previous structural and investment funding, including ‘match’ funding by the UK government and Local Authorities.

Build an ambitious global trade strategy

Review new processes resulting from the Trade and Co-operation Agreement (TCA) and work with the EU to simplify/streamline, in order to reduce the burden of paperwork and prevent delays. Focus initially on areas where businesses have the greatest difficulty, such as VAT and Rules of Origin.

Enhance the SME Brexit Support Fund by increasing the maximum payment per company to significantly above the current threshold of £2,000 and extending the scheme to June 30 2022.

Build a coalition of support around a UK trade and investment strategy, bringing together the network of public and private sector organisations working in this space around a shared ambition and shared goals.

Skills for the jobs of today and tomorrow

Deliver on the recommendations of the Workplace Training and Development Commission, including:

  • Enabling SMEs to understand their own skills needs and identify and invest in the right training options for their teams
  • Rapid roll out of the Local Skills Improvement Plan process across England
  • Increased access to digital skills training and bespoke support for digitisation of processes and automation
  • Access to modular, ‘bite-size’ units of accredited learning to help adults gain new skills more quickly
  • Support for individuals to retrain for sustainable careers, including the provision of an all-age, high quality careers information, advice and guidance service

Ensure young people who have left school have access to training which enables them to catch up on lost learning, including essential maths, English and digital skills, as well as the softer employability skills such as communication, teamwork and resilience.

Expand funding for technical qualifications, including funding for the National Skills Fund to £6bn.

Reform the rules governing the right for foreign nationals to work in the UK by expanding the Shortage Occupation List (‘SOL’) for at least 12 months for sectors where we face immediate labour shortages, such as care workers, and by extending the Seasonal Workers Pilot.

Extend incentive payments to employers to encourage the take up of key programmes designed to give young people the skills and experience they will need.

Invest in the places where we live, work, study and play

Deliver an infrastructure revolution which creates jobs, opens up opportunities to access training and work, and increases greener transport – this should include completion in full of the HS2 ‘Y’ network

Go further than the outcome of the Williams-Shapps Plan and introduce truly flexible fares that work for passengers, whatever their travel needs

Support regional airport capacity by providing a 12-month Business Rates holiday while they get back on their feet, by reinstating the VAT Retail Export Scheme and by reducing the cost of testing for international travellers.

Simplify childcare funding by introducing a childcare budget for every family, giving them the freedom to choose the right model for their individual circumstances and the support needed for parents to work.

Read more

6 tips to help you maintain your online presence post-pandemic

The BCC is calling on the government to help businesses rebuild

Source : UK Small Businesses More   

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.