Hi I have a client who runs a business that s open 11 months of the year and in the month that it is closesd all the employees are paid there holiday pay. All the employees have irregular hours and are paid hourly.
I'm wondering what the best way is to calculate their holiday pay, I know that HMRC have a way of working it out as annualised hours - do you know if this is worked out on 11 months worth of hours? if I do 12 months it would include the holiday period from the previous year.
The month they are closed you would need to pay them their annual holiday entitlement including bank holidays, therefore if they work 5 days per week they would be entitled to 28 days holiday. I would imagine the easiest way to look at this would be to average the number of hours worked weekly over the previous 11 months and multiply this by 5.6 to find out what the annual entitlement would be.
I've used your method and the HMRC method of annualised hours and they are bringing out a different amount of holiday hours so I'm not sure which way to go perhaps I have miscalculated the amounts?
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I have to say I think the 12.07% over states the holiday due in this situation. I certainly use that for clients who have employees with irregular hours and who get paid their accrued holiday as they go along but I don't think it works here. I'm not a mathematician so I can't work out why I think it's incorrect but it must be something to do with that percentage being worked out on a 46.4 week year (52-5.6)...someone clever will tell me where I am going wrong I'm sure.
But to illustrate my point, if someone works 40 hours per week, we know that their holiday entitlement will be 40 x 5.6 =224 hours per year (28 days @ 8 hours per day).
If in Rachel's example there were 11 months averaging at 174.5 hours each, this would be the same as a 40 hour week. Total hours worked would be 1920. 1920 x 12.07% gives 231.74. Basically an extra days holiday.
I have to say I think the 12.07% over states the holiday due in this situation. I certainly use that for clients who have employees with irregular hours and who get paid their accrued holiday as they go along but I don't think it works here. I'm not a mathematician so I can't work out why I think it's incorrect but it must be something to do with that percentage being worked out on a 46.4 week year (52-5.6)...someone clever will tell me where I am going wrong I'm sure.
But to illustrate my point, if someone works 40 hours per week, we know that their holiday entitlement will be 40 x 5.6 =224 hours per year (28 days @ 8 hours per day).
If in Rachel's example there were 11 months averaging at 174.5 hours each, this would be the same as a 40 hour week. Total hours worked would be 1920. 1920 x 12.07% gives 231.74. Basically an extra days holiday.
I'm giving myself a headache here!
The initial error is that it should be 978/46.4 which gives 21.07 hours a week x 5.6 which is 117.99 hours
On your 40 hours calculation there are 1856 hours over 46.4 weeks. 11 months at 174.5 = 1919.5 231.74/1919.5 x 1856 = 224 hours
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John,
Can you explain to me why you are using 52 - 5.6 in your calculation as an oppose to 48?
You have completely omitted the 5.6 figure for a lack of 4 weeks working.
The answer of 118 days suggests the company is open 12 months. I know it's a rather unusual set in any case, imo. But still. Surely the equivalent of the 12.07 percentage in this situation is 11.66. If my calculations are incorrect then I apologise to you as I'm just trying to see why I'm wrong, and you're right lol.
To me the answer is 114 days.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Hi John, Can you explain to me why you are using 52 - 5.6 in your calculation as an oppose to 48? You have completely omitted the 5.6 figure for a lack of 4 weeks working. The answer of 118 days suggests the company is open 12 months. I know it's a rather unusual set in any case, imo. But still. Surely the equivalent of the 12.07 percentage in this situation is 11.66. If my calculations are incorrect then I apologise to you as I'm just trying to see why I'm wrong, and you're right lol. To me the answer is 114 days.
I'm having to think about this lol. The 12.07% is based on an annual entitlement of 5.6 weeks if someone works the same hours each week. So lets take someone who works 20.38 hours a week. Their entitlement is 20.38 x 5.6 = 114 hours. which is correct.
If we do the same calculation at 12.07% we have 20.38 x 46.4 which equals 945.63 hours x 12.07% which equals 114.1 hours, and that matches your calculation, and we know that both are correct.
But the employee has worked 48 weeks, not 46.4, so surely must be entitled to more holiday pay. 20.38 x 48 = 978 x 12.07% = 118 hours.
You have to divide by 5.6 because that is the holiday weeks entitled to, disregardless of the weeks actually worked, and comes back to 118 hours
Rachel, do the employees take the other 1.6 weeks earlier in the year? They are legally entitled to and the company is breaking the law if either not offering it, or paying for holidays not taken.
-- Edited by Leger on Friday 19th of February 2016 03:30:06 PM
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
