One of the most commonly asked questions, when I am doing my HR Health Check, is how do you calculate annual leave for part-time employees?
Although employers are giving their employees holidays there is a whole host of ways on which they are calculated.
What is the Statutory Annual Leave Entitlement?
At present, the Statutory Annual Leave Entitlement is 5.6 weeks paid holiday per year which equates to 28 days. Employers are allowed to include bank holidays as part of the statutory entitlement.
But how do you work out part-time employees?
The way you calculate annual leave for a part-time employee is based on their working week. If you have a part-time employee who works the same number of hours each day be it 2 or 8 you would calculate their annual leave using the following formula:
5.6 x number of working days = Holiday Entitlement
Examples of annual leave entitlement for part-time workers Flossie works Monday, Tuesday and Thursday 8.30am – 2.30pm. As Flossie works the same number of hours each day her holiday entitlement would be 5.6 x 3 = 16.8 By law, you are not allowed to round down but you are allowed to round up to the nearest half day. Therefore Flossie would be entitled to 17 days holiday.
Calculating annual leave as a number of hours per year
When an employee works different hours each day, it would be easier to give a number of hours per annum an employee is allowed to take. If Flossie works 20 hours per week you would work out her holiday entitlement by:
20 (hours per week) x 5.6 = 112 hours holiday per year
Again, this calculation includes the bank holiday entitlement.
Calculating annual leave for zero hours contracted employees
For zero hours contracted employees annual leave starts to accrue as soon as the worker begins work. They are still entitled to a pro-rata amount of 5.6 weeks holiday, which is equivalent to 12.07% of hours worked over a year. The way this is worked out is by:
taking 5.6 weeks holiday and dividing it by 46.4 weeks
(which is 52 weeks less 5.6 weeks) So, annual leave is accrued at a rate of 12.07% per hour.
If Flossie works a total of 15 hours in a month she is entitled to 1.8 hours holiday.
Bank and Public Holidays
There are normally 8 specific bank holidays in each calendar year. It is worth including this number in contracts and handbooks on the rare occasion that this increases. With the Queens Jubilee, an additional day’s Bank Holiday was given but it was not a statutory entitlement. An additional days holiday for every employee can soon add up. This means that especially for small businesses the day would either be unpaid or taken out of your holiday entitlement.It is important to include the bank holidays as part of the overall holiday entitlement even though all staff may have these days off to avoid underpayment of holidays for part-time staff. The majority of bank holidays fall on a Monday and if a part-time employee only works Tuesday, Wednesday and Thursday they would not get as much holiday as their full-time equivalents.
Accrual of Annual Leave
In the first year of an employees employment, an employer may use an accrual system. This means an employee gets one-twelfth of their annual leave entitlement in each month. So by the third month, an employee would be entitled to a quarter of their total leave. After the first year, an employer can no longer use this system.
Rolled-up Annual Leave Pay
An employer must pay holiday pay when the annual leave is taken. An employer is no longer allowed to include an amount of for holiday pay in the hourly rate (known as ‘rolled-up annual leave pay’).
In summary for calculating annual leave for part-time employees:
- Make sure you have a clear contract and handbook that states what bank holidays are included or a total number
- Annual Leave is part of a statutory Employee Benefits package, so it needs to be correct
- Use the formula’s above to calculate the annual leave of any part-time employees
- If you have incorrectly calculated an employees holiday entitlement then get in touch, it is not too late to make it right