Another holiday calculation question Im struggling with i'm afraid.
Client hasnt specified in her contract of employment how holiday pay will be calculated and is now looking for a viable solution to implement.
The employees work variable hrs each month and for all employees there are four different hourly rates (depending on what days/time & type of work the employee undertakes)
For example, an employee may have worked 130 hrs per month, broken down as follows:
60hrs @ £7.00
40hrs @ £8.00
20hrs @ £9.00
10hrs @ £9.50
What would be the best way to tackle what holiday entitlement an employee is due??, would it be to base the calculation on the holiday accruing for each hr worked, for example 130hrs x 12.07% = 15.69 hrs due
I had a similar issue when I did a payroll for a couple of care homes a few years ago, about 90 staff all on irregular hours. I think your percentage calculation is sound (I haven't checked the accrual rate but it's about right, it's in legislation somewhere). As for the pay rate, I'd probably use an eight week weighted average prior to the period of leave, but what a palava and not easy to explain to the employee! Also of course how do you manage it when people take more holiday than they have already accrued and in effect move into debit - it's bound to happen. You basically have to track it all on a spreadsheet.
I'd be interested to hear any other comments on this, I'm sure many employers get this wrong and ignore overtime and just stick to an entitlement based on a very low number of contracted hours, which could end up breaching the working time regulations that lie behind all of this. Or is there an easier way and I'm missing something? Can you override the working time regs with employment contracts?
Accrue hours based on 12.07% of hours worked. (or 12.1% if you prefer, which makes about 10 minutes a year difference in paid holiday)
Pay the hours when taken according to the weighted average of the pay in the last 12 weeks.
Some payroll software ( ) will do both calculations for you. ie keep a running total of accrued holiday hours less holiday hours taken, and work out the 12 week weighted average when required.
The Law of the Land cannot be superseded by a contract.
Why not pay the holiday as it is accrued? I have a client (for whom I use 12.02%) and I pay the accrued holiday in the pay period so if their rate changes there is no complex calculation. I still have to ensure that they do not exceed their entitlement.
Many Thanks for the above suggestions, the weighted average seems the best way to go together with accruing hrs.
I always ask clients for a copy of their contract of employement so I can see what the Holiday Entitlement regulations are but to date (if client even has a contract in place.) they always seemd to say basic entitlement due or 28 days only regardless if employees are on a salary/per hour or variable hours agreement.
This topic drives me nuts. I actually employed a company to help out with employment law bits n bobs because it really does drive me nuts. I learnt a lot of things that we were doing wrong!
We were paying holiday pay as it was accrued and told we can't do that! We were also told that h pay has the be applied to each rate of pay. I.e. They didn't tell us we could calculate using a weighted av. I need to ask more questions. I've still not got my head around it despite being sent help sheets.
This topic drives me nuts. I actually employed a company to help out with employment law bits n bobs because it really does drive me nuts. I learnt a lot of things that we were doing wrong!
We were paying holiday pay as it was accrued and told we can't do that! We were also told that h pay has the be applied to each rate of pay. I.e. They didn't tell us we could calculate using a weighted av. I need to ask more questions. I've still not got my head around it despite being sent help sheets.
Why does it have to be so complicated?
Sonya
The cynic in me says to keep the no-win no-fee lawyers in the manner to which they have become accustomed. It's no coincidence that large numbers of our MPs who make the laws on our behalf are and/or were lawyers.
) will do both calculations for you. ie keep a running total of accrued holiday hours less holiday hours taken, and work out the 12 week weighted average when required.
