Is there a correct way to calculate how much salary to deduct for a sick day? Should calendar days be used or working days? This is not for SSP, it's just one day that has been missed and the company does not want to pay the employee for that day.
I think the usual way is to divide the annual salary by 260 (being 52 weeks X 5 days per week) - although that only follows for someone who works 5 days a week.
OK thanks. Is it the same for holiday as well? I thought I'd read somewhere that unless it says different in the staff handbook calendar days should be used ie annual salary divided by 365.
Holiday pay is paid at the same rate as the worker's normal rate. If they take a week's holiday then they are paid a normal week's wages, be it full time or part time staff.
From the HMRC website:-
Workers are entitled to a weeks pay for each week of leave they take.
A weeks pay is worked out according to the kind of hours someone works and how theyre paid for the hours. This includes full-time, part-time and casual workers.
Working pattern
Pay
Fixed hours and fixed pay (part time or full time)
A weeks holiday pay equals how much a worker gets for a weeks work
If they work irregular hours or shifts then different rules apply.
Pauline
Why has this post left out all my apostrophes??!
(Edited to express annoyance at lack of apostrophes!)
-- Edited by Stardoe on Friday 15th of July 2016 09:49:40 PM
thanks but my question was if it's only one day is it a seventh of one week or a fifth of one week if they work full time. I think it's a fifth from most things I've read although some websites say that holiday accrues by calendar day in the same way that bank interest does.
Not quite sure what you mean, but holiday accrues as soon as an employee starts work.
A full time worker who has been employed for at least a year will be entitled to 5.6 weeks holiday a year (28 days). If an employee has been employed for only 3 months, they will be entitled to 3/12's of their annual entitlement (7 days).
A part time worker will also accrue holiday as soon as they start work, but will get a total of 5.6 weeks multiplied by the number of days they work. e.g. if you work 3 days a week you will be entitled to 5.6 x 3 = 16.8 days per year.
"Accrual system An employer can use an accrual system to work out a workers leave during the first year of the job. Under this system, a worker gets one twelfth of their leave in each month. So by the third month theyd be entitled to a quarter of of their total leave, eg 7 days out of 28 for a 5-day week."
Hi Princess
What is the company policy with regards to sick pay, do they normally pay it for x number of days or weeks upon certain conditions? Is this a custom and practice type of agreement or doe they actually have information detailing it in a contract and/or staff handbook?
Also - what are this person's normal working hours? Eg 9-5, paid or not paid for lunch, Mon- Fri. Assuming they are paid a set wage per week or per month you can then work out a day rate and deduct that, BUT be careful - the company needs to have the authority to be able to do this (via the contract etc mentioned above). I know of companies who will deduct pay for sickness if for example the 'sickness' was caused by say fighting which meant the staff member then couldnt work as they couldnt use their hands. But a clear policy needs to be in place to handle such.
Seems to be some confusion, although there is a link with regards to the holidays. Its all encased in complex employment rights laws, but there is the availability of free help to work things out. Such as sites like ACAS can help with such, as they can with holiday calculations and indeed have some comprehensive information on their site (as well the calculator on the HMRC forum). EG the company can decide if the 28 days Pauline mentions includes or excludes Bank holidays. You cannot deduct days as holidays on days they do not normally work.
If its not a straightforward wage calc as Ive suggested above, perhaps let us have the details and we can get a few more opinions on a day rate?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
thanks but my question was if it's only one day is it a seventh of one week or a fifth of one week if they work full time. I think it's a fifth from most things I've read although some websites say that holiday accrues by calendar day in the same way that bank interest does.
It's working days Princess. Holiday accrual is allowed in the first year by adding 1/12 of their entitlement each month. On a full time salary this would be 2.333 days a month accruing. Although I've not heard of accruing daily before, if you were it would be 0.1077 per working day based on a 5 day week.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Thanks for all your answers. I know how to calculate the number of days holiday and sick, it's one day of each in this case. My question was how to calculate the monetary amount of one day. If it was a week it's easy as you do annual divided by 52. But as it's one day my question was is it a 1/365th of a day (as some websites suggest) or 1260th ie working days. Most people say 1/260th and on checking with the client she had actually specified that in the employee contracts so I'm sorted.
No it's not divided by 365 as they don't work 365. You have to calculate total hours for the pay rate. Next time you get one, perhaps post on here the wage rate, days worked, hours per day, if get paid for lunch break, if holidays include or exclude bank holidays, that sort of thing and a few of us can post our calculations as to wht the day rate will be for one day. So much easier when they have a written contract.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I found the info below which confused me momentarily. Luckily it was in the contract anyway.
"If your contract of employment is silent on the matter you will have to calculate the holiday they are owed using 1/365th of their normal salary. This is because Section 2 of the Apportionment Act 1890 provides that all periodical payments in the nature of income shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly."
Hi Princess Can you please add a link to the relevant legislation please?
What we do need to be careful of here is that the contract of employment does not have to be in writing. Need to consider what has been done for other staff in the past/custom and practice in the absence of written contract. Unless there is some case law that overrides this - might need to do more digging.
-- Edited by Cheshire on Friday 22nd of July 2016 10:48:22 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I normally check the daily rate, if you not sure you can double check (salary-calculator) and deduct it from the wages.
I do same with holiday, if they have 1 day holiday I just deduct it from the salary and add it under "holiday" to show information about holiday payment on the payslip.
-- Edited by NATALIA on Friday 22nd of July 2016 02:44:40 PM
-- Edited by NATALIA on Friday 22nd of July 2016 02:46:23 PM
Joanne, it is written in the contract that it's 1/260th of the salary. I didn't know what when I posted but the client got back to me the next day. Thanks anyway.
Hi Princess Can you please add a link to the relevant legislation please?
Hi Joanne
Don't you just love Google. Princess has got her info from here http://www.refreshinglawltd.co.uk/2015/07/calculating-holiday-pay-employee-leaving-us-calculate-owed/
I wasn't happy with that interpretation so I dug a bit further.
Seems the 1/365th is based on the apportionment law 1870, which can be opted out of by specifying different terms in a contract. I am somewhat satisfied that the court of appeal used sound logic and ruled that it should be 1/260th, even though nothing was specified in the contract. You would actually be doing the employer a dis-service (imo) if you deducted holiday pay at 1/365th
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi Princess Can you please add a link to the relevant legislation please?
Hi Joanne Hi back John
Don't you just love Google. what did we all do without it? Although we all know there is so much junk and mis-information on it (and fortunately some very funny stuff too!)
I wasn't happy with that interpretation so I dug a bit further. I had seen your links, plus a few others and in fact have come across this in the very far distant past.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
HMRC have a very handy holiday entitlement calculator which I used to use in a previous job to calculate holiday pay for casual employees who only worked 1/2 days per week.
The legal minimum holiday entitlement of 28 days assumes a 5 day working week. if an employee works 6 days per week then 5.6 weeks would equate to 33.6 days. I have always assumed that sick pay is the same and that the annual salary is divided by 260 to get the daily rate assuming a 5 day working week. (we tend to use this calculation not for sick pay but for unpaid leave of absence.)
