Flexible working requests you receive from employees, where agreed, frequently result in a reduction or change in hours, from full time to something else. Sometimes changes to hours happen for business reasons as well.
Regardless of the reason, a change in hours will usually affect the employee’s holiday entitlement, but an additional challenge comes due to the fact that changes to hours rarely take place conveniently to tie up with the holiday year. This means a manager or business owner needs to come up with a unique holiday entitlement for that particular holiday year, reflecting part of the year being accrued at full time, and the rest at the new part time rate.
Making the calculation
The first step is to divide the holiday year up, probably either in weeks or months, depending on when the change takes place. For example, if someone worked full time from 1 January to 31 March, and then part time from 1 April to 31 December, you’d use months, and ¼ of the year will be accrued at full time rate, the remaining ¾ at the part time rate.
Then you do the full year calculation for both hours arrangements. For statutory minimum full time, it would be 28 days. For three days a week it would be 22.4 (rounded up to 22.5).
Then you’d take both of those figures, and pro rata them to reflect the proportion of the holiday year they’d apply for. The full time figure applies for ¼ of the year, so that will be seven days. The part time (22.5 days) figure applies for ¾ of the year, so that will be 16.875 days, which you’d round up to 17.
Take the two pro rated figures and add them together, and that will give you the total year entitlement for someone changing hours on 1 April. You can use the same method divided by a number of weeks rather than months if necessary.
Dealing with ‘leftover’ holiday
The other inconvenient aspect of mid-year changes is that it is unlikely that someone who accrued holiday at full-time rate for ¼ of the year will have taken exactly ¼ of their holiday by the time their hours change.
In the example used above, the person has accrued seven days by the end of March. But if they’ve only taken, say, three, that leaves them with four full-time days already having been accrued, but needing to be taken whilst they are working part time.
If their days will be the same length, the only issue that presents is that it will result in them being off for a greater proportion of their new normal working week. If, however, their new working days are shorter, then if you equate a day accrued at full time rate to taking a day off when working shorter days, they’ll lose out. Anything already accrued when they changed hours was ‘in the bank’ and can’t be pro rated down. In those circumstances you may want to look at converting holiday accrued already into hours, or half-days, so that the individual definitely gets any holiday they’ve accrued.
If you have someone changing their hours mid-year and would like some assistance in managing their holiday, do get in touch.