Calculating Holiday Entitlement for Employees with variable hours

Calculating Holiday Entitlement for Employees with variable hours.

The standard calculation for accruing holiday pay for employees that work variable hours is 12.07% of hours worked. This is because there are no standard ‘weekly hours’ to base the 5.6 weeks holiday entitlement on.

Whilst in theory this all sounds very simple, in practice it can be difficult to keep track of the total hours accumulated and taken, especially when employees are paid at different rates of pay for different duties or shifts.

Many employers have struggle to keep accurate records, meaning that their employees can either overtake entitlement or undertake entitlement during the year causing over or underpayments.

dhpayroll are pleased to announce that from the 2019/20 tax year we will be showing  the accrued holiday pay for employees that work variable hours on the payslips. This will provide both employers and employees with clear, up to date information of the holiday that has been accrued and / or taken.

Remember that in most cases employees should use their accrued holiday as paid time off.  Payment for holiday (rather than taking paid time off) should only be made when an employee leaves employment, or works very casual hours and therefore cannot feasibly book leave.

It is recommended that holiday entitlements, holiday leave year and how to book annual leave are covered in the employees’ contract of employment or terms and conditions.

Should employers prefer to keep track of their employees’ holiday separately from the payslips, they should make sure that they keep clear, accurate records of leave accrued and taken over the year.

HMRC have created a helpful online calculator to help employers work out the holiday their staff are entitled to. The link to the calculator is: https://www.gov.uk/calculate-your-holiday-entitlement