Holiday Entitlement & Holiday Pay
What is holiday entitlement in the UK?
All employees in the UK are entitled to time off. This is known as their holiday entitlement.
Currently, UK law states that an employee’s holiday entitlement is 5.6 weeks per year if they are full time. This means that someone working 5 days per week is entitled to 28 days paid holiday each year.
Holiday entitlement for part time workers is based on the hours they work, but is the same 5.6 weeks per year as for full time employees. So, for a part time employee working 2 days per week, their holiday entitlement is 11.2 days per year.
You cannot round down an employee’s holiday entitlement, but you can round it up. For example if an employee is entitled to 15.6 days holiday, you cannot round it down to 15 days, but you may choose to round it up to 16 days.
The 5.6 week entitlement is the statutory minimum, and can include bank holidays. In an employment contract or staff handbook, you can give your staff more than the minimum but not less.
Calculating Holiday Entitlement
If an employee works 5 days a week, their holiday entitlement will be 5.6 weeks, or 28 days in any 12 month period. However, if you have employees who work on different part-time patterns, here is how you can calculate their entitlement:
Annual leave for Part-time staff
For an employee who works full days, but less than 5 per week, simply multiply the number of days they work by 5.6 to give you their holiday entitlement.
Example: 3 days per week x 5.6 = 16.8 days leave per year
For an employee who does not work full days but has a set number of hours each week, simply multiply these hours by 5.6 to give you a leave entitlement.
Example: 21 hours per week x 5.6 = 117.6 hours leave per year
Annual Leave for Casual and irregular staff
For employees who work irregular hours, the calculation is slightly different. For these workers, holiday entitlement accrues as hours are worked. To calculate based on irregular hours, multiply the number of hours worked by 12.07%
Example: 25 hours worked x 0.12.07% = 3 hours and 1 minute holiday
Holiday Pay Entitlement
As an employer, you must ensure that employees are paid in full during their holiday periods.
Even though a full time employee is entitled to 5.6 weeks holiday per year, this is effectively accrued at just over 2 days per month. Therefore, if an employee leaves part way through the year having taken more holidays than they have accrued up to that point, then you are entitled to reclaim the monetary value of any overtaken holiday.
Similarly, if an employee leaves part way through a year, then you must pay them for any accrued holidays they have not taken.
To work out any holiday pay you may owe to your employee, or that your employee may owe to you, multiply the total holiday entitlement for the year by the percentage of the year that has elapsed at the point of leaving. Take this figure and subtract the amount of holiday already taken to find the amount of leave the employee is entitled to.
If the number is positive, you should pay the employee what they are owed; if it is negative then you can reclaim what you are owed.
Notice for taking holidays
You can decide when an employee can take their holidays, as long as you allow them to take the statutory minimum either each year, or the contractual entitlement you have set out. Employees begin accruing their holidays as soon as they start work, and any accrual continues through any maternity, paternity or adoption leave.
An employee must give notice if they would like to take a holiday, and you can choose whether to approve the request or not. Generally, the notice given shuld be two times the length of the proposed holiday. For example, 4 weeks’ notice for a 2 week holiday.
Managing holiday entitlement
It is your responsibility to keep track of when your employees are taking holidays to ensure that all employees take at least the minimum entitlement each year. It is also in the best interests of your business to ensure holidays do not leave you with staff shortages.
If you have a growing number of employees, then managing their holiday entitlement can become complex and time consuming. There is a lot to calculate and manage, particularly if people are joining and leaving at different times throughout the year, if hours change, or if people are on different contracts.
That’s where HR Software can help. Managing your employees’ holiday is an essential part of running a business and Cascade could help you to save crucial administration time and relieve logistical headaches.