How to calculate holiday entitlement for employees?
Below are the steps that needs to be taken for calculating your holiday entitlement –
- Present your “employment status” - whether you are a full time employee or work part-time
- Define your “employment contract” – whether your contract states that you work full time or do your work part time.
- Select the number of days/hours worked per week .
- If your “employment contract” states part-time worker, then you have to also mention full time work hours in a week. Full time work hours are the total number of hours in a week worked by an employee who works full time.
Holiday Entitlement Calculator
This calculator is only for reference purpose and provides an estimate. But if you wish to get an accurate result please consult with an expert accountant.
- Most employees are, by law, entitled to 5.6 weeks paid holiday per year (referred to as statutory entitlement)
- Part-time employees are eligible for a similar amount (on a pro-rota basis) as full-time employees
- Employers have the option to set the time for leave (depending on the workflow) – for example Christmas break
- In case employment ends, employees are eligible to get paid for any leave due which have not been taken
- There is no lawful right to compensated public holidays
From the first day of employment a worker's right to paid annual leaves begin and this is not dependent on a minimum period of employment. For workers who are in their first year of employment the regulation permits an employer to manage a holiday accumulation system. This means that a new worker, joining an organisation, will accrue 1/12 of their yearly holiday entitlement. Workers are entitled to one week’s pay, for each week of leave accrued. A week’s pay is computed in accordance with the nature of work carried out:
- For workers that are employed on fixed hours and fixed pay, it equals the amount payable for a week's work
- For workers that are employed on fixed hours and variable pay (including bonus, additional benefit or commission), it equals the standard hourly rate multiplied by the usual working hours in a week
- For shift workers, the entitlement equals the average weekly hours of occupation in the previous 12 weeks at the average hourly rate
- For workers with no standard working hours, a week’s pay is the average pay expected over the prior 12 weeks
To compute the average hourly rate, an employer only has to add up the hours where the employee was working and pay the proportionate amount related to those hours. Overtime hours should be included in this calculation.
The 12-week reference period is usually made up of 12 weeks in which pay is due to the worker. Any week in which the worker received no pay is replaced by the week before that. To understand this better, let’s assume that no pay was given to a worker in the fourth week; hence, the reference period should include weeks one to three followed by weeks five to 13.
Almost all employees in the UK are lawfully eligible for a 5.6 weeks’ paid holiday per year. These holidays are referred to as statutory leave entitlement or annual leave. An employer has an option to include bank holidays as part of statutory annual leave. Most people working in the UK for 5-day week must receive paid annual leave of 28 days’ per annum. This is computed by multiplying a working week (5 days) by the annual entitlement of 5.6 weeks. Part-time employees are also allowed a minimum of 5.6 weeks of holiday pay per annum, even though this may amount to less actual days of paid holiday as compared to a full-time employee. For example, if a part-time employee works 3 days a week, his / her annual leave will be 3 multiplied by 5.6; this works out to 16.8 days of annual paid leave.
Other aspects of holiday entitlement
Employees have the right to:
- Get paid for leave
- Accrue holiday entitlement during adoption, maternity, and paternity
- Holiday entitlement in case of ill health
Paid annual leave for employees is a legal right and each employer must permit it. If an employee thinks that he / she is not getting their due there are multiple ways to resolve the dispute.
Employees working irregular hours are also eligible for holiday pay entitlement. However, their holiday pay may be computed for each hour worked. The percentage is 12.07% as used for the statutory minimum i.e. 28 days. Therefore, the holiday right for 5.6 weeks is equal to 12.07% of hours worked. The figure of 12.07% is arrived at by dividing 5.6 weeks by 46.4 weeks (52 weeks – 5.6 weeks) multiplied by 100. The 5.6 weeks are excluded from calculation purpose as employees would be present during this period (accumulated annual leave).
At the discretion of an employer, employees can get additional leave apart from the regular leave. It is not necessary to apply all the rules under annual leave for extra leave. For example, an employee might need to be working for a certain period of time before they become entitled to extra leave.
Employees are entitled to a week’s pay and it is worked out according to the kind of hours an individual works and how they get paid for those many number of hours. The nature of work could include casual workers, and full-time, or part-time employees.
Full time or part time – Fixed hours and fixed pay
Holiday pay for a week equals how much an employee gets for a week’s work
Full time or part time – Shift work with fixed hours
Holiday pay for a week equals the average number of fixed hours worked within a week as worked in the preceding 12 weeks
Casual work – no fixed hours
Holiday pay for a week is the average pay an employee will get over the preceding 12 weeks
Under the Deduction from Wages Regulations 2014 (SI 2014/3322), if an employer has made any illegal deductions from holiday pay, an employee can claim for unlawful deductions made inside two years from the date of pay. This will be appropriate to claims starting post 1 July 2015. Additionally, the new rule also makes available the right to imbursement in respect of twelve-monthly leave provided for by the Regulations.