I have just taken on the payroll for a pre school, and they have an employee on zero hours contract. Their holiday pay is calculated over the 12 months and is paid within their salary each month, as they only have holiday during the school holidays. However, I am unsure how to calculate their holiday if they are on a zero hours contract. Any ideas please??
I've always understood holiday pay to be based on an average of the past 12 weeks, so to me it depends how they've paid it in advance (of knowing what the 12 weeks earnings were).
If all goes well you do nothing because they've already had their holiday pay but conceivably each employee might differ if they've worked over or under the anticipated amount given in advance.
As Hellsbells says in another thread, paying holiday 'rolled up' like this arrangement is almost illegal now, but doesn't always seem so to me and enforcing their rights probably depends on the employees complaining.
Is it possible to give the actual figures just in case that helps clear things up.
I take it then that if they are on a zero hours contract, they are not spreading their pay over the 12 months like some pre-schools do but instead only getting paid for the time they are actually in (on an hourly rate)? If so I think you could add a line to your pay slip saying 'accrued holiday' and calculate this at ( I think) 12.07%. So if they work 50 hours at £7.50 for one month, the gross would be £375 and you apply 12.07% and get accrued holiday pay at £45.26.
Someone cleverer than me may point out my maths as being wrong but I worked it out along these lines:
If someone works 5 days a week, then that's 260 days. Deduct 28 days for holiday, 260-28 = 232
260/232 = 1.1207.
There must be a simpler way!
I should imagine that it would need to be written into the contract of employment that the employee is happy for the holiday pay to be paid like this, otherwise I would agree with Tim's 12 week average.
Hi.I agree with Rob's method of calculating.I dont think there is an easier way.
If you decide to retain/accrue the holiday pay, then you might find this link helpful to determine the holiday hours due.Just follow the process through the "casual or irregular hours" option:
I think its tempting to pay rolled up holidays for a zero-hour contract but here is a bit warning/quote from www.employmentlawadvocates.com :
An employer cannot "roll up" holiday pay, that is, say that the pay they are paying their worker includes holiday unless they meet with certain strict "guidelines":
(1) it is clearly set out in the contract that holiday pay is being rolled up and what percentage represents holiday pay,
(2) the payslips clearly show how much pay is for holiday pay, and
(3) the employer does all that is practicable to ensure the worker takes that time off.
The process of rolling up holiday pay is unlawful, however if the "guidelines" are strictly followed then the employee is unlikely to have redress against the employer. The process of rolling up holiday pay is frowned upon by Employment Tribunals, so if holiday pay is rolled up it can be a treacherous exercise convincing the tribunal you have followed the "guidelines" to the letter.
One example I have is where it was a relief staff member, who worked 46 hours in May at 6.32 per hour. Now, with it being a pre school, what happens is the regular staff get paid 12 times a year, although they don't work during August. Their holidays are whenever the school holidays are, so their annual salary is divided over 12 months, plus they get their holiday pay in each months payroll.
The zero hours people only get paid for the hours they work, plus that months accrued holiday pay.
Starting to wish I hadn't agreed to do this payroll! Eek!
