Holiday allowance calculator: The key details

Annual leave is a huge part of a worker’s life, and as an employer, it’s important you get it correct. Workers who feel they’re wrongfully denied paid holiday could feel bitter towards their employers and make a claim against them.

Fortunately, HR software exists, with a range of tools, such as a holiday allowance calculator, processes are refined that mitigate the chances of your business being punished.

Our guide explores holiday pay and how a holiday allowance calculator can make operations smoother.

Who’s entitled to paid holidays?

Eligible workers, under the Working Time Regulations 1998, are entitled to a minimum of 5.6 weeks of paid annual leave. This applies whether they work full time, part time or have a zero-hours contract.

The number of days a worker receives depends on days or hours worked, and any additional agreements they may have with their employer. From the day they start working, workers accrue holiday. This includes when someone is on:

A probationary period
Sick leave
Maternity, paternity, adoption or shared parental leave

Statutory paid holiday

As mentioned, eligible workers are entitled to 5.6 weeks paid annual leave per year—bank holidays might be included. Paid holiday is limited to 28 days, even if someone works 6 days a week.

Part-time workers are still entitled to 5.6 weeks paid holiday, but this will consider the hours they work. Those working part time mustn’t be favoured less than full-time workers.

Employers must incorporate any relevant payments for at least 4 weeks of a worker’s paid annual leave, and must include:

Payment relating to contractually required tasks, such as commission
Payments linked to professional or personal status—length of service, seniority or qualifications
Other payments like overtime

When workers take leave, they must be paid for it. Employers might distribute holiday pay over the year by adding an amount on top of their workers’ hourly rate. This is referred to as ‘rolled-up’ holiday pay.

Unless a worker is covered by the rules for irregular hours workers and part-year workers, employers should not do this.

To understand the foundations of annual leave, download our free annual leave template here.

How to calculate holiday pay

Employers may offer better holiday pay schemes, but when a worker takes annual leave, they should receive the same pay when they’re on holiday as when they’re at work.

Calculations can be based on days or hours worked per week, casual or irregular hours, and shifts.

Calculating a week’s pay

A week typically starts on a Sunday, ending on a Saturday. With that in mind, a worker’s holiday pay is to be calculated from the last complete week of work. This can end on, or before, the first day of the worker’s annual leave.

What to do for different working patterns

Working patterns influences calculating an individual’s holiday pay:

Fixed hours: If there’s no variation to a person’s working hours, their annual leave pay will be calculated using their usual pay rate.
Irregular hours workers & part-year workers: This is based on their average pay over the previous 52 weeks. If a worker hasn’t been with the business 52 weeks, they should look at how many full weeks they’ve been employed.
Changed working hours: If a worker transitions from full-time to part-time hours, holiday entitlement will be recalculated from the point of the change—holiday accrued will also not be affected up until in this point.

Carrying over holiday

Depending on the circumstances, and if there’s a relevant agreement, workers can carry over their 5.6 weeks’ holiday entitlement. A relevant agreement could be:

A workforce agreement: Made between an employer and worker representatives
A collective agreement: Involves a recognised trade union and employer
A legal agreement: A legally enforceable agreement between worker and employer

Long-term sick leave

If a worker is on long-term sick leave, they’re able to carry over a maximum of 4 weeks paid annual leave, but it must be used within 18 months starting from the end of the leave year in which it was accrued.

When holiday can’t be used because of statutory leave

Because of statutory leave, such as maternity leave, a worker may not be able to use their annual leave. In these circumstances, workers must be allowed to carry their entitled holidays to the next year—and this should be arranged with their employer as soon as possible.

If an employer prevents a worker taking all their holiday

Legally, employers must ensure workers can take the annual leave they’re entitled to. By law, a worker can carry holiday over if their employer:

Stops them or discourages them from using all annual leave
Fails to inform a worker that they will lose unused holidays

In these instances, workers are entitled to carry over a maximum of 4 weeks’ holiday entitlement.

FAQs: Holiday allowance calculator: The key details

Who is entitled to paid holiday?

Individuals who qualify as workers are entitled to statutory minimum paid annual leave. Irrespective of how regularly they work, this encompasses full-time, part-time, agency, and zero-hours staff. Self-employed individuals are not entitled to paid leave.

What is the minimum legal holiday entitlement?

The statutory minimum is 5.6 weeks per year, which is 28 days for a full-time worker.

How do I calculate holiday for a part-time worker?

Part-time workers are entitled to a pro-rata amount of 5.6 weeks’ leave. The calculation is (days worked per week x 5.6). Using a holiday allowance calculator simplifies the calculation.

Do employers have to give bank holidays off?

Employers are not legally obliged to give time off for bank holidays. They can opt to include them as part of the 28-day statutory minimum.

How is holiday calculated for a new starter?

Workers accrue paid annual leave from the moment they start their role. During their first year, you can implement an accrual system where they build one-twelfth of their entitlement each month. Use a holiday allowance calculator for assistance.

Conclusion: Holiday allowance calculator: The key details

Holiday entitlement is important for workers and employers. Getting it wrong could lead to claims from workers, which financially and reputationally is detrimental for your business.

It can be complicated to calculate holiday allowance. However, there are tools available to simplify this, making it easier to protect your organisation. Most notably, a holiday allowance calculator.

Do you need further guidance? Speak with Peninsula

With over 40 years’ HR experience and over 2000 Google reviews with a rating of 4.8, Peninsula provide expert support with holiday pay.

Partnering with Peninsula gets you 24/7 HR advice and unlimited assistance with your documentation.

You’ll also have access to award-winning HR software, which includes a staff holiday planner and a holiday allowance calculator to streamline your operations.