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Holiday Entitlement

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When it comes to employing individuals for your company, it is vital that you understand what each employee’s holiday entitlement is. This article will shed some light as to what each employee can expect, how holiday entitlement is calculated and how it is paid. In the UK, under current legislation, almost every worker is legally entitled to a full 5.6 weeks of paid holiday per year (this is commonly known as annual leave or statutory leave entitlement). These 28 days per year of paid leave is on the basis that the employer is a regular full time worker who is working 5 days a week. There are special ways to calculate holiday pay for irregular workers which are outlined below. For those staff that work regular hours but are not full time, they will still be entitled to the 5.6 weeks statutory holiday entitlement. The only difference is that the actual holiday they can take is pro-rated to reflect how many days they actually work. So if they work a 3 day week but with regular hours, they will be entitled to 16.8 days of annual leave (3 day x 5.6 entitlement). If however, an employee does not work fixed hours every day (for example, a care worker may work longer hours on certain weekdays and shorter hours on others), then it is possible that their holiday entitlement is calculated on a basis that is similar to an accruals basis. This is done by taking whatever the employee’s contractual hours are and multiplying this by 12.07%. This calculation provides and employer with each individual’s holiday entitlement. Having looked at how holiday entitlement is calculated, the next step is to look at how holiday pay is calculated based on each employee’s holiday entitlement. This is outlined below in this table:

Working Pattern

Holiday Pay

Fixed hours and fixed pay (can be both full or part time individuals)

Employees are paid at their usual work rate meaning that a week’s holiday pay would the same as a week’s work pay.

Shift work but with fixed hours (full and part time workers)

Paid on an average basis meaning a week’s holiday pay will equal the average number of fixed hours worked in the previous 12 weeks at the average hourly rate.

No fixed hours – irregular / casual worker

A week’s holiday taken will be paid at the average pay that the worker earned of the previous 12 weeks (for those they were actually paid).

One thing to note on the 12 week average calculation is that if there is a week during the previous week where no pay is paid, you roll back a further week so that the rate used is based on the previous 12 weeks where there was actually pay paid to the employee. If you would like more information about holiday entitlement and how Wisteria could help and assist you and your company with Payroll, please feel free to contact us on 020 8952 0140 or email [email protected] where a payroll specialist will be more than happy to help you. Please note that the above is general guidance only and does not constitute specific advice.  You may need to speak to an employment lawyer or other specialist if you are unsure of your position.  

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