Holiday Pay calculation

JodieR

Employer employs several staff on a contract which states that employees will work a minimum of 15 hours a week but it's expected that most weeks they'll work 30-40 hours. There's also a clause saying that if the weather's particularly bad for a full week (ie preventing the work being carried out) then they'll have to take that week unpaid (or put in holiday for it).
What do you think the best way to calculate holiday pay is? would you just take the hours worked each month and multiply them by 5.6/52? or by 5.6/(52-5.6)?

Jodie

Monsoon

I have staff who work variable hours.

I believe the correct entitlement is 5.6 * average weekly pay, where
average weekly pay = total pay in year/52

Your method sounds fine.

I dont believe the 12 week rule applies to these (which uses average weekly pay over the last 12 weeks) as that applies more to shift workers as opposed to variable hours.

payrollpro

The 12 week rule still applies but in a different way. Have a look at S222 of the Employment Rights Act 1996 http://www.legislation.gov.uk/ukpga/1996/18/section/222 which covers the situtation where the amount of payment varies by the number of hours worked. The average hours worked over the previous 12 weeks is mutliplied by the average hourly rate of remuneration over the same period.

Payrollpro

Monsoon

Thanks PP.

So if someone does a huge amount of overtime for 2 weeks and then takes holiday 15 weeks after, having dropped to lower hours, it's tough luck and the holiday will not take into account the overtime?

I remember double checking a while back which indicated I should do a pro rata of actual hours worked over the holiday year, but I'm not sure where I got that from, I think it was from direct.gov.uk.

zara5034

Have a look at this guidance from ACAS, it's what I often refer to.

http://www.acas.org.uk/CHttpHandler.ashx?id=955&p=0

Zara

Monsoon

Thanks Zara

From that, it looks like you have a choice:

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 in order to accrue annual leave.

and

Workers with no normal working hours:
If a worker has no normal working hours then a week’s pay is the average pay received over the preceding 12 weeks. Any week for which no pay was due should be replaced by the last previous week for which pay was due.