How to calculate annual leave?

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PayFit

29 August 2019

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Oh hello, is it September yet? Summer is now behind us and you’re wondering when you should take your next holidays or being asked from your employees these recurring questions... how much annual leave do I have left? How much annual leave can I carry over?

 

Your holiday entitlements

How much holiday you get is normally set out in your contract of employment.

 

Employees and most workers with fixed hours are entitled to a minimum of 5.6 weeks annual leave per year, capped at 28 days paid unless a company offers additional paid annual leave. Bank and public holidays can be included in this minimum of 5.6 weeks annual leave entitlement.

 

Employees and most workers with non-fixed, zero or casual hours are entitled to a percentage of annual leave for every hour they work.

 

Calculating annual leave

Basic calculation

For a basic calculation of your leave allowance, multiply the number of days you work a week by 5.6.

 

For example, if you work a five day week you would be entitled to 28 days' annual leave a year:

5 days x 5.6 weeks = 28 days

Annual leave for part-time workers

Regardless of how many days an employee works, they are still entitled to 5.6 x the number of days worked per week.

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For employees working 6 or 7 days per week, maximum statutory entitlement per year remains capped at 28 days of statutory paid leave.

Annual leave for casual workers and zero hour contracts

Employees and workers who do not have a set amount of hours to work per week have their annual leave calculated slightly differently.

 

For each hour a person works, they accrue 12.07% as annual leave.

 

For example, a zero hour worker has worked 76 hours this month:

76 X 12.07% = 9.17 hours has been accrued to be taken as annual leave.

 

When should annual leave be paid?

There are two instances when an employee must be paid holiday pay:

 

1. When employee takes annual leave

2. When employee leaves employment

 

Regular payments for accrued leave to employees, including those on a zero-hour contract, are not allowed. This is called 'rolled-up holiday pay' and is no longer accepted by HMRC and ACAS.

 

How much annual leave can an employee carry over?


What does the law say?

An employee must take all the EU statutory leave (4 weeks) during the leave year otherwise it will be lost. The 1.6 week (or 8 days if an employee works full time) which the UK added to this statutory leave may be carried over if agreed with the employer. This is not an automatic right.

Exceptions to the law

If the carry forward is a result of the employee being off on maternity, paternity or adoption leave, they can carry it all over.

 

However, if an employee hasn’t been able to take their full holiday entitlement because of sickness, they can carry up to 20 over.

 

An employer can decide to offer more than the statutory leave and therefore more leave can be carried over. This should be stated in the employment contract and the company handbook.

I have a small business, should I allow carry over?

Now that you are aware of the law, you need to decide whether you want to allow unused holidays to be carried over or not.

 

A statutory holiday entitlement is there for a reason, however two in five employees in the UK don’t take their full holiday entitlement. To ensure the health and wellbeing of your employees, you want to make sure they take enough time off during the year to disconnect and recharge. Another concern for small businesses is that allowing carrying over holidays can be costly.

 

In some situations it’s still a nice option to have for your employees so rather than not allowing carry over, ask yourself why employees are not taking their full entitlement? Is the workload too heavy? Do they fear having to catch up and falling behind? It’s best to address this before the year ends and to encourage them to take time off before it breaks and has a negative impact on the business.

 

Managing leaves with PayFit

PayFit is not only a payroll solution, it also automatically makes calculations based on employees holiday entitlement and update their payslips in real-time. Employees can request leaves and see their annual leave balance directly in their employee portal as well as on their payslip. Last but not least, PayFit allows you and your team to be in the know whenever someone is on leave thanks to the calendar view.

This is a great time saver and avoids these recurring questions.

 

 

 

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