October 11, 2016

Holiday entitlement calculations made easy

Calculating holiday entitlement for full time employees is relatively straight-forward. But what about when an employee starts or leaves part way through the holiday year, and what about part time employees?

That’s when calculating entitlement can get a little more difficult.

To help you through this arithmetic exercise we’ve compiled the following guide to hopefully take the stress out of your calculations.

Click on an example below to jump to that calculation:

Full time employees starting or leaving part way through the holiday year (Top ↑)

Regardless of how many days holiday you give, the calculation will follow the same format. In all cases, the total number of days used for the calculations should always be inclusive of bank holidays even if you close on these days.

Statutory minimum – 28 days inclusive of bank holidays

Whether your company recognises the bank holidays and closes on these days or whether they are normal working days as they would be in the care and service industries, the calculation will be the same.

Regardless of the start date of your holiday year, the following calculation will give you the holiday entitlement for someone starting part way through your holiday year.

Here’s the basic calculation to work out entitlement per month of service:

Number of days inclusive of bank holidays ÷ 12 (months)

So:

28 days ÷ 12 (months) = 2.33 days holiday entitlement per month

That’s:

2.33 × the number of months left in the holiday year for a new starter

Or;

2.33 × the number of months already gone in the holiday year for a leaver.

Example: Starter (Top ↑)

Employee begins three months into the holiday year – company closes for bank holidays

2.33 × 9 = 20.97 days
(rounded up to 21 days which INCLUDES any bank holidays which fall on one of their normal working days.)

So if your holiday year was 1st April to 31st March, and this person begins in July, they will have the August bank holiday, Christmas Day, Boxing Day and New Year’s Day – a total of four bank holidays taken out of their 21 days, leaving 17 days which can be booked as annual leave.

If your holiday year was 1st January to 31st December, and this person begins in April, they will have Good Friday, Easter Monday, May Day, Late May Spring Bank holiday, August bank holiday, Christmas Day and Boxing Day, a total of 7 bank holidays out of their 21 days, leaving 14 days which can be booked as annual leave.

If you don’t close for the bank holidays the calculation is exactly the same – the employee will be entitled to all 21 days.

Example: Leaver (Top ↑)

Employee leaves three months into the holiday year – company closes for bank holidays

2.33 × 3 = 6.99 days
(rounded up to 7)

This employee will have accrued 7 days holiday, inclusive of any bank holidays which have occurred in the first three months of the holiday year.

The bank holiday(s) plus any holiday they have already taken should be deducted from the 7 days they have accrued.

If there is entitlement left, this should be paid with their final salary.

If they have taken more holiday than the 7 days they have accrued, you will need to reclaim the overpayment from their final salary.

The same will apply where the company doesn’t close – they will still have accrued 7 days so deduct what holidays, if any, they have taken, and either pay for the remainder or recover the excess as above.

25 days plus bank holidays

25 + 8 = 33 days
33 ÷ 12 = 2.75 days

So:

2.75 × number of months left in holiday year for a starter

Or;

2.75 × number of months already gone in the holiday year for a leaver

Using the example above, if the employee begins three months into the holiday year.

2.75 × 9 = 24.75 rounded up to 25 days (inclusive of bank holidays if you close on bank holidays).

More guidance on the latest payroll legislation

Part-time employees

Formula to calculate a part time employee’s holiday entitlement:

Full time entitlement (including bank holidays) ÷ 5 (days) × the number of days the part timer works.

Statutory minimum holiday entitlement for part-time employee (Top ↑)

Employee works one day per week:

28 days (20 holiday days + 8 bank) ÷ 5 (days in a working week) = 5.6 days holiday, rounded up to 6 days
(inclusive of any bank holidays which fall on one of their normal working days)

Employee works two days per week:

28 ÷ 5 = 5.6 days
5.6 × 2 = 11.2, rounded up to 11.5 days
(inclusive of any bank holidays which fall on one of their normal working days)

Employee works three days per week:

28 ÷ 5 = 5.6 days
5.6 × 3 = 16.8, rounded up to 17 days
(inclusive of any bank holidays which fall on one of their normal working days)

Employee works four days per week:

28 ÷ 5 = 5.6 days
5.6 × 4 = 22.4, rounded up to 22.5 days
(inclusive of any bank holidays which fall on one of their normal working days)

Employee works five days per week:

28 days
(inclusive of bank holidays)

In all of these calculations, the days’ entitlement are their normal working days, so the employee who works five days a week, two hours per day will be entitled to 28 days at two hours.

Calculating entitlement in hours

If a part time employee works different hours each day, you could use their weekly hours to calculate their holiday entitlement.

For example, if your full time hours are 40 per week, and an employee’s part time hours are 26 per week: 8hrs Monday, 3hrs Tuesday, 4.5hrs Wednesday, 3.5hrs Thursday and 7hrs on Friday.

Then the calculation would be:

28 (days) × 8 (hours per day for full time) = 224 hours full time holiday entitlement
224 ÷ 40 (hours for full time week) = 5.6 hours per day
5.6 × 26 hours per week = 145.6, rounded up to 147 hours.

Part time employees starting or leaving part way through the holiday year (Top ↑)

Sometimes, there is confusion when calculating part time entitlement for a starter or leaver.

Use the above formula to calculate a part time employee’s holiday entitlement.

Then use the basic calculation to work out entitlement per month of service and multiply this by the number of months left in the holiday year for a starter, or the number of months already gone for a leaver.

Example: Starter

A part time employee begins seven months into the holiday year, working three days per week, and full time entitlement is 23 days plus eight bank holidays.

23 + 8 = 31 days (full time in complete year)

31 (total no. holiday days) ÷ 5 (no. days in a working week) = 6.2
6.2 × 3 (no. days worked each week) = 18.6, rounded up to 19 days for the complete holiday year

19 ÷ 12 (months) = 1.58 days per month
1.58 × 5 (months left in the holiday year) = 7.9, rounded up to 8 days
(inclusive of any bank holidays which fall on one of their normal working days*)

In this example, the employee would receive eight days for the remainder of the holiday year.

Example: Leaver

Employee leaves eight months into the holiday year, working 2 days per week – the company does not close for bank holidays. Full time entitlement is 30 days.

30 (total no. holiday days) ÷ 5 (no. days in a working week) = 6

6 × 2 (no. days worked each week) = 12 days the for complete holiday year

12 ÷ 12 (months) = 1 day per month
1 × 8 (months already gone in the holiday year) = 8 days holiday entitlement

Therefore, if this employee has taken less than eight days holiday they should be paid for the remaining accrued holiday with their final salary or, if they have taken more than eight days, the excess will need to be deducted from their final salary.

The above formulas should assist in your holiday entitlement calculations, but if you are unsure or need any help with your holiday calculations please contact your support team.

Want a round-up of stories like this delivered to your inbox?

About the author

Elaine Pritchard

Elaine has a wealth of knowledge in producing contracts, training materials and other documentation as well as training other consultants. She piloted a scheme whereby she went on-site to act as a client’s HR Manager two days per week, whilst the post-holder was on maternity leave. Elaine also previously ran her own retail business for seven years, employing four people. Elaine is a field based consultant for Moorepay and provides on-site HR and Employment Law advice, consultancy and training services to our clients.