How to calculate pro-rata holiday entitlement
Almost all workers in the UK are legally entitled to 5.6 weeks’ paid holiday each year. This is known as statutory leave entitlement and can include bank holidays.
Employees working a 5-day week get a minimum of 28 days’ paid holiday days each year (including bank holidays).
Pro-rata holiday entitlement is a calculation based on the amount of annual leave an employee is entitled to in relation to the amount of the holiday year they have worked.
If your employees are full-time and work five days a week, then they're entitled to a statutory minimum of 28 days’ paid annual leave a year, or 5.6 weeks’ holiday. If your workers are part-time and they work the same number of hours each day, Monday to Friday, every week they are also entitled to 5.6 weeks’ holiday, but this works out to be less than 28 days because they work fewer hours per week.
Zero hour workers are entitled to holiday in the same way as full- and part-time workers at a rate of 5.6 weeks a year. However, someone on such a contract might work 12 hours one week, 20 the next, then none the next. Because of this flexibility, it is often easier to calculate their entitlement in hours rather than days.
To work out how much holiday they should take, you should take an average of the hours worked in the 12 previous weeks. If there were any weeks when they weren’t working and therefore weren’t paid anything, then those weeks should be substituted with the most recent previous weeks where they were paid for working.
The basic way to work out how many days holiday an employee is entitled to is to multiply the number of days a week they work by 5.6. That gives someone working a five-day week the 28 days we’ve already mentioned. Someone who is part-time and only works three days a week would be entitled to 3 x 5.6 = 16.8 days.
It gets more involved if the hours differ on the days they do work, but our online calculator allows you to work out holiday entitlement both in days and in hours worked each week.
Similarly, if you have a member of staff who starts part-way through the holiday year or leaves part-way through, then the amount of annual leave they are entitled to will be calculated based on the amount of time they have actually worked for you and will be a proportion of the full entitlement that they have accrued. This would be their pro-rata holiday entitlement.
Our HR-user dashboard provides a snapshot, shop-window view of your employees' holiday allowances, including any adjustments you've made from the calculations above or below. Check out the adjustment tab and click on (time off in lieu) TOIL to explore further - this is also used for updating holiday from overtime hours worked.
For employees that join or leave part-way through your business' holiday year - regardless of full or part-time status - their annual leave entitlement is based on the amount of time worked during their period of employment with you.
It's important to note that staff accrue annual leave at the rate of 1/12 per every month worked.
Employees starting part-way through the year will have their holiday entitlement calculated from the date they join.
For example, if your holiday year start date is January 1 and they don’t start working for you until March 1, their holiday allowance will be based on the period from March 1 through to December 31.
Employees accrue annual leave at the rate of 1/12 for each month within the holiday year, therefore, in this instance the employee will be entitled to 10/12 of a full year’s holiday allowance.
For an employee leaving part-way through the year the period of entitlement will run from your holiday year start date through to their leaving date.
If they’ve taken more than their annual leave entitlement at the point they leave, then you can take the money back in their final pay pack, but only if it has been agreed in writing beforehand. If they have taken less than their entitlement at the point of departure you may be able to offer them payment in lieu of holiday.
If you have part-time staff or staff who work irregular hours each month, then the calculations are carried out differently again. You also need to be mindful of bank holidays when working out their entitlement.
If staff work irregular hours, for example, they are shift workers or working patterns change regularly, then holiday pay will be based on the average hours they have worked in the previous 12 weeks.
Knowing how to deal with bank holiday entitlement in relation to your employee's annual leave allowance can understandably leave you scratching your head. Should they form part of the annual holiday entitlement or be additional to them? What happens if someone never works Mondays or Fridays when most bank holidays normally fall?
With eight bank holidays in the UK a year (a couple more in Northern Ireland) it’s something you need to consider for all workers.
Contrary to popular belief, workers don’t have a statutory right to not work bank holidays. You as an employer or HR manager get to decide whether or not they can. You can also decide whether bank holidays are part of their holiday entitlement or additional to it, but you must lay those terms out in any contract of employment. Whether you offer extra pay for working bank holidays should also be outlined.
When it comes to bank holiday entitlement for part-time workers they are entitled to the same amount of bank holidays but on a pro-rata basis and, if employment terms state they have to work bank holidays, then they have no right to refuse.
Employees start to accrue holiday from the moment they start working for you. Staff accrue holiday as a monthly proportion of their annual entitlement. So, each month they accrue one twelfth of their annual entitlement in advance.
For example, if a worker that has 28 days annual entitlement starts working in January, then by June they will accrue 6/12 of that annual entitlement or 14 days.
An employee will still build up leave even if on maternity, paternity, adoption or sick leave.
Part-time employees and zero hour workers accrue holiday in the same way but it is calculated slightly differently. For part-time workers you will work out how many days a year they are allowed by multiplying the annual entitlement of 5.6 weeks by the days they work e.g. 5.6 x 2 = 11.2 which you round up to the nearest day so 11.5.
If you apply the same situation in the example above for a full-time worker, a part-time worker who starts in January will have accrued 5.75 days holiday.
Zero hours workers are also entitled to a pro-rata amount of the 5.6 weeks a year entitlement but this is worked out on hours rather than days. Holiday is accrued at a rate of 12.07% per hour.
Carry over is a term used in relation to annual leave and referring to when an employee has unused holiday that they would like to 'carry over' into the next holiday year. If someone still has five days holiday left, can they carry it over to next year?
Under the EU working time directive employees must get four weeks’ paid leave a year and it must be taken in that leave year or it will be lost. The extra 1.6 weeks (or eight days) available in the UK can be carried over to the following year if you agree to it as an employer.
You can also write in extra leave and what happens around it into an employee's contract. For example, a new trend is to add a couple of days onto an employee's holiday allowance to act as duvet days.
The exception to these rules around carry over is if an individual is unable to take their statutory minimum leave e.g. because of sickness or maternity, in which case it can be carried over to the following year but must be taken within 18 months.
As a business however, it is entirely up to you whether you allow leave to be carried over. Staff wellbeing and morale is important but, at the same time, you don’t want a rush of people all taking extra leave to fit it in and leaving you short-staffed. If employees know they can roll over leave they might also not take adequate breaks throughout the year which research shows can lead to employees feigning illness in order to have time off work and rest.
Make keeping track of annual leave a breeze with Breathe's holiday-management system
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If an employee wants to book time off, then they must give you at least twice the amount of notice of the time they want off e.g. two weeks’ notice for one week’s leave.
As a business, you should have an agreed process for your employees to follow when requesting annual leave. Whether that's using a paper form or an online holiday management system, and this should be clearly outlined and communicated to your staff.
It is possible for an employer to refuse a request for annual leave, but, again, you must give as much notice as the amount of leave requested and it is best practice to provide the employee with a reason as to why their annual leave request was denied. Not doing so could result in your employee feeling unvalued and understandably disgruntled.
You may have some workers entitled to a half day of annual leave if they’re part-time, for example. How you let them take part days is up to you, as their employer, and can be written into employment contracts or your employee handbook.
As an employer, you have the right to specify when leave should be taken by your employees. You can insist employees take bank holidays or Christmas as leave and the days will be deducted from their annual leave allowance. You can also restrict leave at certain times of the year such as periods of work which are really busy for your company such as sales.
Take a free trial of Breathe to see for yourself how easy it is to win back time in your day and help your people be the best they can be.
