Introducing the IRIS Holiday Pay Module
We’re pleased to announce the introduction of the IRIS Holiday Pay Module. This will integrate with IRIS Payroll Professional and both Earnie Executive and Earnie Business to automatically calculate the amount of holiday pay due to your employees each pay period.
Back in 2014, the results of two employment tribunals have meant that the way UK companies calculate holiday pay will be changing. Fulton v. Bear Scotland and Lock v. British Gas argued that overtime and commission should be included in an employee’s holiday pay calculations and this is set to become the next big thing within the payroll industry, after the introduction of auto enrolment as part of the workplace pension reform back in October 2012. Earlier this year, British Gas' appeal was rejected and this has now paved the way for changes in how holiday pay is calculated.
What Do I Need To Do?
Presently, UK companies have four options:
- Do nothing and await further clarification
- Pay annual leave based on average earnings over a 12 week period
- Offer a two-tiered holiday pay system basing the first 20 days on average weekly earnings and the remaining 1.6 weeks holidays on static earnings
- Pay additional holiday pay based on a percentage of all non-guaranteed overtime
As with the National Living Wage, employers across the country opted to implement the legislation into their payroll before it was officially made into a law, and the holiday pay legislation will likely follow a similar pattern.
There is no clear definition of how to calculate the payments, other than an average of 12 weeks. If employers opt to act on the ruling there are a number of things that you need to consider:
- What constitutes a day’s or an hour’s holiday pay?
- How is holiday calculated for monthly paid individuals?
- If a statutory payment is included in a pay period, should the whole pay period be excluded from the calculation?
The IRIS Holiday Pay Module provides a flexible solution, allowing the user to define how the payment should be calculated. Individual pay elements can be selected, future-proofing the solution, should other payment elements be affected in the future. This gives the user full control over the calculation.
The IRIS Holiday Pay Module will be updated in line with any changes to legislation allowing your business to remain compliant.
At present, users who purchase the IRIS Holiday Pay Module are also enrolled onto a specialist training course and then a product configuration four weeks later. This is designed to bring users up-to-speed on the legislation, then show how to configure their payroll software to ensure ongoing compliance, before finally providing a one-to-one consultancy on your business’s individual needs.
If you’d like to know more about the IRIS Holiday Pay Module, why not register your interest? We also run regular, free webinars on a range of topics including holiday pay, book now to reserve your place.