HR Updates

Update on the latest holiday pay and calculation ruling

Following the ruling that holiday should no longer be calculated on a 12.07% calculation, there has been clarification received to confirm there may be instances where the 12.07% calculation may be used.

Where a contract of employment clearly demonstrates an employer is at no obligation to offer an employee hours, and where an employee is under no obligation to accept any hours offered then it may be deemed that the employee is not under a continuous contract and therefore not entitled to receive holiday for the full year.

The employment case that identified the calculation to not be used was a teacher who was under a continuous contract and expected to be available to work for all of the terms of the school year, therefore they were entitled to receive holiday for the full year.

Please see below examples of which method to use depending on the contract followed by worked examples for each. Each example is based on the statutory holiday of 28 days (5.6 weeks).

Job TypeExample

Full-Time Employee 28 days: Whether the bank holidays are taken when they fall or if they are part of the holiday allowance to be taken at an alternative time.
Where employees receive additional pay for their role, such as overtime and commission, the pay paid for the holiday period should be paid as an average of what has been paid over the preceding 52 weeks.
Part-Time Employee A part-time employee will receive a pro-rata amount of the 28 days inclusive of bank holidays. If a bank holiday falls on a day the employee would usually work and they take that day off, it will need to be booked out of the holiday entitlement.

Examples of days and hours of holiday.
1 Day per week: 5.6 * 1 day = 5.6 days holiday per year, rounded up to 6 days
2 Days per week: 5.6 * 2 days = 11.2 days holiday rounded up to 11.5 days
3 Days per week: 5.6 * 3 days = 16.8 days holiday rounded up to 17 days
4 Days per week: 5.6 * 4 = 22.4 days holiday rounded up to 22.5 days
Hours: 16 hours worked per week: 5.6 * 16 = 89.6 hours holiday rounded to 90 hours holiday

Term Time Employees Term-time employees are entitled to receive the full holiday year. Term-time employees are advised to take their holiday outside of term time. A calendar approach to holidays is the easiest way to calculate this and to pay employees their holiday pay in equal instalments over the 3 terms.

5.6 weeks of holiday over 3 terms totals 1.86 weeks of holiday that can be taken and paid at the end of each term.

Casual Employees – Zero Hours Where an employee is a ‘true’ zero-hour employee, under no obligation to be offered or accept hours of work and are not expected to keep in touch in between assignments.

You can calculate their holiday entitlement by taking 12.07% of the sum of hours worked in a week to arrive at the amount of holiday accrued.

“Example: An employee works 70 hours across a 3-month period. They wish to take some holiday and have asked how much holiday they are entitled to.

70 hours * 12.07 % = 8.449 hours rounded up to 8.5 hours holiday accrued. ”
5.6 weeks of holiday over 3 terms totals 1.86 weeks of holiday that can be taken and paid at the end of each term.

Shift Workers Shift workers may work on differing shift patterns. For example, 6 days working 3 days off, making a 9-day week rotation or 4 days working 4 days off making an 8-day week rotation.

To calculate these you need to establish how many days on average fit into a normal 7-day calendar period.
e.g. taking the 4 on and 4 off pattern, the pattern rolls over an 8-week period. 28 days divided by 8 weeks gives an average of 3.5 days per week. 5.6 weeks multiplied by 3.5 days per week = 19.6 days holiday rounded up to 20 days holiday inclusive of bank holidays.

Worked examples of holiday pay

Full-Time Employees: Where employees work overtime or received commission, then an average of this through the year should be paid whilst on holiday.

Worked example an employee has worked an additional 105 in the 52 weeks prior to the holiday to be taken. 105 divided by 52 weeks totals 2.019 additional hours on average per week, multiplied by the hourly rate this should be paid on top of the usual holiday pay.

Term Time Employees – Autumn Term (Sept-Dec)

Week Hours Worked
5th Sept 22 6
12th Sept 22 10
19th Sept 22 6
26th Sept 22 4
3rd Oct 22 10
10th Oct 22 15
17th Oct 22 10
24th Oct 22 0 – Half Term
31st Oct 22 6
7th Nov 22 0
14th Nov 22 6
21st Nov 22 12
28th Nov 22 10
5th Dec 22 5
12th Dec 22 5
19th Dec 22 0 Christmas Break
26th Dec 22 0 Christmas Break
Total 105 in this term

Worked example 105 in this term, with an additional 200 hours worked going back 52 weeks, adding the 2 together for the last 52 weeks is 305 divided by 52 weeks totals 5.86 hours on average worked per week, multiplied by 1.86 = 10.90 round to 11 hours to be paid for the autumn term at the end of December /January pay.

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