Calculating holiday entitlement can be tricky. Where you have someone who is working a regular pattern with the same hours per day is pretty straightforward. If someone is full time, then they receive a minimum 28 days per year (5.6 weeks) inclusive of bank holidays. You can of course give more should you wish to do so. This entitlement should be detailed in the contract of employment.
Calculating holiday entitlement for starters and leavers
When calculating holiday entitlement for starters and leavers, the starting point is the contractual holiday entitlement. You then simply pro-rate the holiday year based on the number of completed months they have worked (unless the contract says otherwise).
So for example, if you give 33 days (25 company holidays + 8 bank holidays), and the employee works 10 full months, the calculation is 33/12*10 = 27.5 days.
Just be careful, if you only give statutory holidays, that you do not inadvertently give less than the 5.6 weeks entitlement. For instance if the employee works 10.5 months and you only give them entitlement for 10, this would be below the minimum entitlement. Where you just give the standard 28 days, you should round up not down.
Calculating holiday entitlement for part time employees
Where a part time employee works the same number of hours per day and the same number of days per week, the calculation of holiday entitlement is straightforward. You simply pro-rate the number of days worked by the full time standard (eg 3 days worked out of 5 gives a 60% entitlement to annual leave). The number of hours worked isn’t relevant to the calculation. Whether the employee works 3 hours per day or 8 doesn’t affect the number of days annual leave accrued. What it does affect is the pay for that day’s annual leave.
Part timers and bank holidays
The simplest way of managing bank holidays for part timers is to consolidate the bank holiday and contractual holidays into one amount and then pro-rate.
For example, an employee working 3 days a week with a contractual holiday entitlement of 25 days would receive the following days:
33/5*3 = 19.8 days (rounded to 20)
Every time a bank holiday falls on a normal working day, the employee has to book it off. If a bank holiday falls on a normal working day, they don’t need to book a day as they are not paid for that day.
If the employee works different hours per day, then this will need to be calculated in hours.
Calculating holiday entitlement for zero hours workers.
Zero hours workers are entitled to a pro-rata amount of the 5.6 weeks. As their hours are not guaranteed, they receive 12.07% of the hours worked as holiday pay. That is 7.25 minutes per day holiday pay.
Holiday pay should be paid as a separate line on the payslip.
Calculating holiday pay for term time employees
Before 2019, part time employees would receive the same calculation as zero hours workers. This calculation was challenged in Harpur Trust v Brazel (2019) which said that term time workers should receive 5.6 weeks regardless of how many weeks they work. So if you work 30 weeks of the year, you would get more annual leave than someone working 52 weeks a year. This decision is being sent to the Supreme Court in 2021 so watch this space for updates.
The above decision doesn’t mean that part timers can’t still be pro-rated.