Another holiday pay question

mini_schnauzer
mini_schnauzer Trusted RegularRegistered Posts: 347
Hello

Sorry, another holiday pay question...

Since start of new tax year 2011, an employee has worked an average of 24.125 hours per week (6 weeks). Each week different hours are worked.
How do I calculate what holiday pay she is entitled too? I have been asked for 4 days holiday pay to be paid to her.

Do I take the average hours over the 6 week period 24.125 hours x 5.6 weeks entitlement = 135.1 hours for the years holiday entitlement?
And therefore pay her 24.125 hours x 4/5 days = 19.3 hours for 4 days paid holiday?

Or do I use the 12.07% rate for casual workers?

I have asked for details of the staff members contract re holiday entitlement/calculation.

Comments

  • payrollpro
    payrollpro Trusted Regular Hampshire/SurreyRegistered, Working Together with HMRC, FMAAT Posts: 425
    The method of calculating the holiday pay rate ought to be laid down in the contract of employment. If it is not, and clearly in this case it isn't, otherwise you would not be asking, then the terms laid down in the employment rights act 1996 apply.

    I am guessing this employee has, what are called, normal hours of work but that the amount paid varies because the hours vary. If my memory serves me right it means section 221 or 222 apply. Whichever one is absolutely correct doesn't matter as the overall effect is probably the same.

    You either average the rate of pay over 12 weeks or the amount of a weeks pay over 12 weeks, depending on which section applies. You are close with the six week average, you just need to extend the averaging period a bit.

    I am not sure what your referring to with the 12.07% rate but I would be cautious about classifying them as "casual workers" as this has a specific definition in both employment and tax law.

    Payrollpro
  • Rozzi Rainbow
    Rozzi Rainbow Trusted Regular Registered Posts: 465
    payrollpro wrote: »
    I am not sure what your referring to with the 12.07% rate but I would be cautious about classifying them as "casual workers" as this has a specific definition in both employment and tax law.

    I use the 12.07% rate for one of our clients whose employees work varied hours and therefore it is nigh on impossible to work out an average week's pay and hours worked. My understanding is that it applies to employees who work "casual hours" (or very irregular hours in this case) rather than "casual workers".

    Basically for each hour worked, 12.07% of an hour goes in the holiday pot. This is worked out as 5.6/46.4 (holiday weeks/actual weeks worked in the year). I got the info about this from the ACAS website here on page 6 of this leaflet:

    http://www.acas.org.uk/CHttpHandler.ashx?id=955&p=0
  • zara5034
    zara5034 Well-Known Registered Posts: 170
    I have also used the 12.07% method with similar clients
  • Monsoon
    Monsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    As I understand it, the last 12 weeks method is for shift workers. Using the 12.07% method is more appropriate for those working non-set hours e.g. someone who might work 10 hours one week and 30 the next and 15 the next, the 12 weeks method isn't really appropriate as they won't get credit for extra hours worked in weeks prior to the 12 weeks if their hours are significantly reduced in the 12 week period prior to the holiday.

    I have employees on zero hours contracts whose hours fluctuate as above and I use the 12.07% method, not the 12 weeks method.

    It's all on either business link, or direct.gov, or both. Worth a google.
  • babsa
    babsa Well-Known Registered Posts: 118
    The 12 week method can not be used to calculate the persons holiday for the whole year. To calculate a year years entitlement there are a couple of way and you will need to find out the best way for you.

    irregular working patterns: calculating holiday in hours
    If a member of staff works annualised hours, you need to calculate how many hours a week they work on average over the whole year.
    So if a member of staff works a total of 1,600 hours a year, or 34.48 hours a week over 46.4 weeks of the year, the holiday entitlement is 5.6 weeks x 34.48 hours a week = 193.09 hours' holiday for the year.
    The statutory holiday entitlement is excluded from the average working week calculations.


    Casual workers

    If a member of staff works on a casual basis or very irregular hours, it is often easiest to calculate holiday entitlement that accrues as hours are worked.
    The holiday entitlement of 5.6 weeks is equivalent to 12.07 per cent of hours worked over a year.
    The 12.07 per cent figure is 5.6 weeks' holiday, divided by 46.4 weeks (being 52 weeks - 5.6 weeks). The 5.6 weeks are excluded from the calculation as the worker would not be at work during those 5.6 weeks.
    So if someone works 10 hours, they are entitled to 72.6 minutes paid holiday (12.07 ÷ 100 x 10= 1.21 hours = 72.63 minutes)
  • mini_schnauzer
    mini_schnauzer Trusted Regular Registered Posts: 347
    Thanks for replies - all sorted ;)
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