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Holiday pay - a quick guide

Holidays


We all need them. Even workaholics.

But what about your staff? Do you know the basics, such as statutory entitlement, accrued holiday pay, and bank holidays?

Here’s a handy guide to hopefully smooth the path for you.


The Basics


All workers have the right, from the very first day of employment, to paid holiday pay per year. This is covered in the Working Time Regulations and is set in law. Obviously, the amount of paid holiday does depend upon the number of days worked, but for now, we’ll focus on the full-time workers. They are entitled to 28 days paid leave, and that includes the 8 bank holidays per year that we have within the UK.


An easy way to calculate this is to multiply the number of days that you work by 5.6.

For example, 5 days worked per week equals 5 days x 5.6 = 28 days. Simple.


It’s worth mentioning at this point that holiday pay should always be mentioned in your contract of employment. In particular, the way that holiday pay is calculated. (yes, there are several different ways!).


Holiday Pay Accrued


This simply means that staff are effectively given their holiday pay in equal chunks of time. For example, if a staff member has only worked for one month, they are then entitled to 2.3 days’ holiday pay (one-twelfth). So, after 6 months, they will have accrued 14 days holiday pay, (including bank holidays).

Generally speaking, the holiday year for new employees will be by fixed agreement, but if not, it runs from the employee start date, for a period of 12 months.


Irregular Hours Holiday Pay


In this instance, it is more difficult to calculate holiday pay. It is generally accepted that the fair way to deal with this is to work out the average weeks’ pay by using the previous 12 weeks as a guide. Reviewing work records (which you will already have to hand in your payroll records), will easily provide the information that you need.


What Happens if I Don’t Take My Annual Leave?


Any staff members who have holiday entitlement from their original allocation must take it within the specified holiday year. If not, they will in all probability, forfeit that leave. Of course, they could carry it over, if this is agreed by the employer, from one holiday year to the next.


What Happens if I Leave?


If a staff member leaves, having taken fewer holidays than they are entitled to, then they should receive a payment in lieu of the untaken holiday. The opposing situation to this is when a worker leaves, having taken more holidays than they have accrued. In this instance, a deduction from the final pay, in lieu of excess holiday pay may be taken.

Finally, we don’t always have a calculator to hand, so here’s a handy link, to assist in your holiday pay calculations.


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