Calculating holiday for anyone who doesn’t work a standard five day full time week can be challenging for manager, and difficult to explain to staff, too. But what happens when someone isn’t actually reducing their hours at all, but is just working them differently, such as compressed hours?
Compressed hours normally means someone who carries on working full time hours, but instead of over a five day week, instead they work longer days and do those hours over a four day week instead. Because the hours remain the same, pay is unchanged, but holiday entitlement is a little more complicated.
For the vast majority of workers, holiday is calculated and expressed as a number of days, and your employee moving to compressed hours will only be working four days a week. This means that if, for example, you offer statutory minimum holiday entitlement, which is 5.6 weeks, they only need 22.4 days holiday not 28 as a standard 5-day-a-week full timer gets.
If their holiday entitlement as expressed in days were to remain unchanged, as they only need to use four days to take a week off, they would actually then be getting seven weeks off rather than 5.6 as their colleagues get.
The difficulty can come when explaining this to an employee moving to compressed hours, as it can feel like their holiday is being ‘reduced’ when they are not actually changing the number of hours they work.
If this happens, try explaining it to them in weeks or hours rather than days. In hours, their holiday entitlement will not reduce, as every time they take a day off, they will get (say) 10 hours off work, and 10 hours’ pay, rather than 7.5 hour.
In weeks, every time they take a week off, they only need to use four days rather than five, but will get paid the same as before.
In respect of bank holidays, it’s best not to try to separate these out, as, depending on what days they work, they could end up with either too few days off, or with more than they should be getting.
Instead, take the total amount of leave, including bank holidays, that they had when working five days a week, pro rata that, and then as and when a bank holiday falls on a day they would be working, that comes out of their entitlement, leaving the rest to be booked as normal.
If you’d like some help calculating and managing holiday for a compressed hours work or for other irregular workers, do get in touch.