Many business owners know that standard full time employees are entitled to 5.6 weeks’ paid holiday each year, and in most businesses which observe bank holidays, this entitlement is commonly expressed as four weeks’ holiday plus bank holidays. So far so simple.
But where many managers come unstuck is when they employ part time, fixed term or casual workers, or those with irregular hours. Here’s our guide to calculating holiday for your irregular workers, and keeping it as simple as possible!
How much holiday are these part time or irregular workers actually entitled to?
It’s useful to start thinking of annual leave entitlement as 5.6 weeks, rather than 20 days plus bank holidays, or whatever you offer. All workers are entitled to 5.6 weeks paid leave, a week being whatever hours they normally work during a week. So someone who works one day a week is still entitled to 5.6 weeks, it’s just that their week is fewer days than your standard full time employee.
Your irregular workers will almost always be part time, and it’s important to remember that you cannot treat part time staff less favourably than full time staff, so even if you offer more than 5.6 weeks to full time staff, you need to do the same for part time staff, on a pro rata basis.
Employees who work regular hours but are part time
We always recommend calculating and administering annual leave in days where possible – this is easier for you, easier for the booking and administration process, and easier for employees who want to know how many days off they actually get.
So for someone who works, say, three days a week, you’d first look at what entitlement full time employees get. Assuming it is the statutory minimum of 5.6 weeks a year, your three day a week worker gets the same, so three days a week x 5.6 = 16.8 days a year. You cannot round the number down, so it would be sensible to round it up to 17 days.
If you’re calculating in days, then the same applies even if the employee works shorter days than a full time member of staff. So if in the example above of a three day a week worker, the staff member only works four hours a day, they’d still get 17 days a year, as a day’s holiday for them would be four hours pay rather than the full timer’s 7.5 (or whatever a full day is for you).
Part time employees who work regular hours, but work a different number of hours on each day
Sticking with the three day a week example above, say you have someone who does six hours on two of their working days, but only three on the other day. Although calculating holiday in days is generally easier, in this case it wouldn’t be appropriate. Most people take a mixture of full weeks and single days off, and if the person took a higher proportion of the shorter day off, they’d lose out. So in this case you need to do it in hours.
Again, start with the 5.6 weeks entitlement. The employee works 15 hours a week, so your calculation would be 15 hours a week x 5.6 = 84 hours. The employee would need to book holiday in hours also, so for one of their six hour days, they’d need to book six hours, but if they wanted a day off on the day they normally only work three hours, they’d only need to deduct three hours from their total entitlement.
Employees who are casual, or work a different number of hours each week
In these cases there is no standard week to multiply by 5.6, so you have to use another calculation to ensure that they accrue the right amount of holiday for the hours they work.
Holiday accrued is 12.07% of time actually worked. So if you have casual workers who are not in regularly, or staff who are in regularly but do different hours each week, keep a record of the hours they work (which you obviously are anyway in order to pay them) and at the end of each month, calculate 12.07% of the hours they’ve worked, and this will be how much holiday they’ve accrued and is available to them to take.
It’s up to you whether you allow flexible staff to take holiday that has not yet been accrued, or insist that it must actually be accrued first. If they are regular staff who just happen to work variable hours, you’re probably safe to let them book more holiday than they’ve actually accrued just as you would with an employee working standard hours each week, on the basis that you are sure they will accrue it going forward.
Fixed term employees
If you have fixed term employees on regular hours that you anticipate being with you less than a year, all you need to do is reduce their annual leave on a pro rata basis. First calculate what their entitlement would be for a full year, i.e. 5.6 weeks of their normal week. On the basis of the three day a week example we’ve been using, that would be 16.8 days.
If the employee’s contract is for eight months, you need to pro rata it as follows;
16.8 days ÷ 12 x 8 = 11.2 days. You cannot round down, so you’d need to round up to 11.5 days.
If the employee’s holiday needs to be expressed in hours because they work different hours on each day, and is therefore 84 hours, you can do the same calculation – 84 ÷ 12 x 8 = 56 hours.
What about bank holidays?
Some employers like to keep bank holidays as separate, and definitely define holiday as being 20 days with bank holidays on top. That works fine for full timers but does present problems for part timers.
If you have someone who works three days a week, and you separate out holiday and bank holidays, their pro rata entitlement would be 12 days holiday, and (assuming 8 bank holidays for full timers) 4.8 bank holidays. You can’t use the 5.6 total as a basis for your calculation, so you’d need to divide a full timer’s entitlement by five and multiply by three to get the entitlement for someone working three days a week.
You can see that 12 days holiday plus 4.8 days bank holidays adds up to the correct 16.8 days total, but the difficulty comes when your part time employee actually takes their holiday, because you are relying on the fact that exactly five bank holidays will fall on their normal working days, which may coincidentally be true in any given year, but much of the time will not be – and it will change year on year as those bank holidays which vary (Christmas, Boxing Day, New Year’s Day) – move to different days.
For this reason, even if you prefer to separate out bank holidays for full time staff, it’s important to roll them up into a total entitlement for part time or irregular staff. They must get pro rata what full timers get in total, and if you close on bank holidays, you should require them to take one of their days off if they would normally be working that day.
Key points to remember:
- Use 5.6 weeks for your calculation where possible
- Whatever you give full timers must be pro rated so that part time staff get the same total entitlement on a pro rata basis.
- Calculate holiday in days if a part timer works the same hours each day they are in, or in hours if it varies
- Use 12.07% as a calculation for casual staff or those working different hours each week
- Roll up bank holiday and holiday entitlement into one total for part timers to ensure fairness, and require them to deduct a day’s holiday when there is a bank holiday on one of their working days
Still confused about holiday? Do get in touch if you would like help with your part time or irregular staff.