Unmanageable Management: Why spreadsheets won’t work for Holiday Pay in April 2020

Holiday Pay changes are on their way, and they’ll be here before we know it. With only nine months left until the legislation comes into force, it’s time to begin preparations.

The amendments to the Working Time Regulations 1998 mean that the calculation period for Holiday Pay will increase from 12 weeks to 52 weeks, on a rolling basis. For employees who have not been with the organisation for 52 weeks, their calculation period will be the length of time they have currently served.

The changes are a result of the Taylor Review, an in-depth independent analysis of UK working practices, from which the Government’s Good Work Plan was born.

The new legislation renders spreadsheets for managing Holiday Pay completely unmanageable. With additional payments included and a rolling 52 weeks to take into account, the administrative burden becomes too much, and greatly increases the risk of human error.

Who will feel the effects the most?

All organisations will feel the effects of the new legislation to some extent, but those with irregular working patterns will struggle the most. Retail, warehousing, agency and construction organisations who run off timesheets and rotas may find that they need to completely overhaul their current processes, as weekly working hours change along with additional payments, resulting in more complex calculations compared to companies that run their holiday pay based on salary.

How can we combat this?

In preparation for the new changes, we have developed our new Holiday Pay functionality for Earnie and Earnie IQ. The Holiday Pay Module will automatically calculate the rolling 52-week average weekly pay within your payroll, including all necessary elements, and eliminating the lengthy process of updating separate spreadsheets and manually inputting additional calculations.

What does the new Module do?

Definable Pay Elements

You can decide what is and what isn’t included in your 52 week average weekly earnings calculation, for example, periods with zero pay. From there, the software will automatically calculate any Holiday Pay and automatically add it to the payroll run.

Default Holiday Entitlement

The Holiday Pay Module allows you to set holiday entitlement for enhanced and contractual leave for both individual employees, and entire departments. Enabling you to automatically determine who is entitled to what when it comes to getting paid for going away.

Holiday Pay Calculation for Individual Employees

Within the Module, you can quickly view the Holiday Pay calculation for individual employees, which will show you how their average weekly earnings value has been calculated, as well as all of their included pay periods, and those that have been excluded from the calculation.

Monthly Divisors

For those employees that are paid monthly, the Holiday Pay Module enables you to set a monthly divisor for the 52-week average weekly earnings calculations, ensuring that the correct amount of pay is attributed.

If you think that our Holiday Pay Module is the stress free approach to the new legislation that you’ve been searching for, give our team a call on 0344 815 5656.

Stephanie Coward

Managing Director, HCM

Stephanie Coward is Managing Director for HCM at IRIS, where she leads the strategy, innovation and growth of the organisation’s HR and payroll portfolio. She is responsible for positioning IRIS as a trusted partner to HR professionals and ensuring its solutions support the evolving needs of modern workforces.

With more than 25 years’ experience in the technology sector, Stephanie brings deep commercial and operational expertise, with a passion for improving the employee experience through technology.

Stephanie is committed to advancing IRIS’ HCM offering and helping organisations build more resilient, empowered workforces.