We’ve had a couple of interesting support questions this month at SMB Towers regarding calculation of employee holiday allowances. In both cases, customers were taking on new employees part way through the holiday year and did not agree with our calculations regarding the amount of paid time off a new employee should be able to take outside of public holidays.
This got us thinking and, after a little digging around through our small business network, we found a number of businesses weren’t meeting their legal obligations regarding the amount of paid holiday being offered to new starters and part time staff. Their thought processes went something like this:
If an employee is starting three months into the year, and I usually give 20 days’ holiday plus public holidays, then that new employee should get 15 days (three quarters of the year) plus whatever holidays are left. Right?
At first glance, this is a simple and easy way to calculate holiday allowances for the year.
At second glance, this is actually incorrect, and could leave you open to a nasty legal situation. Here’s why.
In the UK, employees are covered by Statutory Leave Entitlement, which entitles them to 5.6 weeks, or 28 days, paid leave for a full time employee working a full year. Employers can, and mostly do, include the 8 public and bank holidays as part of that leave, leaving 20 days of “bookable” holiday time.
When calculating how much holiday a full time employee should get if they start their employment part-way through the year, you first need to calculate the pro-rata amount of total holiday days. In the example above, the new employee is working for three quarters of the holiday year, so is entitled to 28 days * 75% = 21 days of paid leave.
Now you need to look at how many public holidays actually fall in the working period. If the employee started on the 1st April 2014 and your holiday year ran from January 1st to December 31st, this employee would actually be working during 7 of the 8 public holidays. Subtract that from the 21 days of leave, they are left with 14 days of “bookable” holiday, not 15.
Now let’s assume your holiday year runs from April 1st to March 31st, and the employee starts three months into the year on 1st July. How does it look for this employee?
Again, they’re working three-quarters of the year, so get 21 days of total leave entitlement. However, only 4 public holidays fall in this period (Summer Bank Holiday, Christmas Day, Boxing Day, and New Year’s Day), so this employee would have 17 days of “bookable” holiday. Yes, it may seem they get to book more time off, but actually they have exactly the same amount of paid holiday as the first employee.
Most importantly, both employees are getting their full statutory entitlement and you, the employer, are meeting your legal obligations.
The government have a great calculator on their website to work this out for you – https://www.gov.uk/holiday-entitlement-rights – or better still you can let SMB.co.uk do the heavy lifting and handle all of the calculations for you. Our platform calculates the exact amount of holiday any employee should receive, whether they are full time or part time, including how much of that time is “bookable” for each employee.
Are you managing absence entitlement correctly? See what we can do to make things easier for you – register for a free 14-day trial of SMB.co.uk today.
Image thanks to Pixabay