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Pro-rata holiday entitlement and pay: How do you calculate it?
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Pro-rata holiday entitlement is an amount of holiday that’s in proportion to the holiday entitlement of a full-time employee.

The proportion of holiday will depend on how much an employee works, relative to a full-time employee. For example, if they work half as much, they are entitled to half as much holiday.

There are a number of different scenarios where you might need to calculate pro-rata holiday entitlement and pay. We’ll look at each of these in this post.

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Calculating pro-rata holiday pay

For salaried employees working fixed hours, calculating holiday pay is fairly straight forward. They simply receive their usual pay each month, regardless of whether they’ve taken some days off that month as holiday.

For workers who don’t work fixed hours, or who receive varying amounts of pay each day, things get a little more complex.

But before we can calculate holiday pay, we need to work out how much holiday someone is entitled to.

How do you calculate pro-rata holiday entitlement for part-time employees?

To calculate pro-rata holiday entitlement for part-time employees working the same number of hours each day that they work, you’ll need to:

      1. work out what proportion of a full-time working week they work
      2. multiply this by the amount of holiday a full-time employee is entitled to.

So, say your part-time employee works 3 days a week.

This is 3/5ths of a full 5-day working week. This means they’re entitled to 3/5ths the amount of holiday as a full-time employee.

Assuming you offer the statutory minimum paid holiday to your staff (i.e. 5.6 weeks, or 28 days) your part-time employee would be entitled to:

      • 3/5ths of 28 days
      • (28/5 = 5.6. 5.6 x 3 = 16.8)
      • so 16.8 days holiday

While you can’t round down holiday entitlement, you may wish to round up to the closest full or half-day to make allocating the leave more straightforward. You don’t have to do this though.

You should never round down, though, as this would deny your staff their full entitlement.

If you offer the statutory minimum paid holiday, another easy way to calculate how much paid holiday part-time workers are entitled to is to multiply the number of days worked per week by 5.6.

So, for someone working a 3 day week the calculation would be:

  • 3 x 5.6 = 16.8 days.

If your full-time employees are entitled to more than the statutory minimum, you must ensure that your part-time employees receive a pro-rata equivalent of that amount.

For example, if your entitlement for full-time employees is 36 days, a part-time worker working 3 days a week would receive 3/5ths of 36 (3/5 x 36) = 21.6 days.

This effectively means that they can take 21.6 days of holiday and still receive their usual monthly salary.

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Calculating holiday for part-time employees working different hours on fixed days.

If an employee works days of varying lengths, holiday entitlement should be calculated in hours, otherwise an employee might take all their holiday on days when they work longer hours.

To even things out, you should multiply the hours they work each week (rather than the number of days they work), by the number of weeks of holiday they are entitled to, to calculate their holiday entitlement in hours.

If you have an employee working 22 hours per week, and offer the statutory minimum holiday entitlement of 28 days, (5.6 weeks) the number of hours worked over 5.6 weeks (and therefore how much holiday they would be entitled to) is 123.2 hours (22 hours x 5.6), which you may wish to round up to 124 hours.

 

How do you calculate holiday pay for casual workers and zero-hours workers?

For individuals whose hours vary, such as casual employees with no normal hours or zero-hours workers, calculating their holiday entitlement in advance is complicated by the fact that their irregular working pattern means it’s impossible to predict how many hours they will work over a year.

A common way to approach this is to calculate their entitlement on an accrual basis.

We also recommend that you review at the end of each holiday year (and at the end of a contract) to check that workers have had and been paid for the correct amount of holiday.

Let’s look at an example.

John is a casual worker for Jones Limited.

He is entitled to 5.6 weeks of paid holiday each year.

John has been working for Jones Limited for 12 weeks and has worked 125 hours so far. He wants to take some holiday next week.

The calculation will be:

      • 125 (hours worked) / 12 (weeks) = 10.42 (average hours worked per week)
      • 10.42 (hours) x 5.6 (weeks) = 58.35 (annual holiday entitled based on hours worked so far)
      • 58.35 (annual hours entitlement) / 52 =1.12 hours accrued each week
      • 1.12 x 12 (weeks worked) = 13.46 hours holiday leave accrued over the twelve weeks worked.

This means John is entitled to 13.46 hours of paid holiday.

Provided he gets paid the same per hour worked – he’ll get 13.46 hours’ worth of pay while on holiday.

But what if he gets paid different amounts for different hours? For example, perhaps he gets paid more for the hours he works on a Sunday, or receives overtime or commission payments.

In this scenario, we’ll need to work out how much an employee earned over the previous 12 week period in order to work out an average rate of pay.

If they didn’t earn anything one week, this week should not be included in the calculations, and the 13th week should be used instead (i.e. the calculation should only be based on the last 12 weeks of employment in which the employee was paid).

Let’s go back to John at Jones Limited.

John’s total gross pay over the previous 12 weeks is £2,575. This means his average weekly pay is £214.58 (2575/ 12 = £2575).

If he takes one week’s leave, he receives £214.58.

If he takes two days leave, his weekly pay is divided by five and then multiplied by two amounting to £85.83.

Alternatively, to calculate in hours – divide the total pay, by the number of hours worked to get the hourly rate. (£2575 divided by 125 hours = £20.06 per hour).

This means John should receive £20.06 for every hour of holiday taken.

Changes to holiday pay calculations in 2020

It’s important to note that from 6 April 2020 the holiday pay reference period will change from 12 weeks to 52 weeks.

This is to even out any seasonal variations in pay. For example, if someone always works more overtime over Christmas then this would inflate their holiday pay if they always took leave in January.

If an employee has not yet worked at a company long enough for a year of pay data to be available, the reference period will be the number of weeks that they have worked for the company so far.

How do you calculate holiday entitlement for shift workers?

In this situation, the most accurate approach is to calculate the average weekly working time over an appropriate period of weeks. This should be possible where there is a rota system.

For example, Jones Limited have workers who are on an eight-day cycle, working two 12-hour day shifts, followed by two 12-hour night shifts, followed by four days off.

In the first four weeks of this cycle, they are working four days per calendar week, but in the second four weeks, they are working three days each calendar week. As each worker is doing an average of 3.5 shifts over an eight-week period. They are therefore entitled to 19.6 shifts of annual leave each year (3.5 x 5.6)

As this calculation will often result in a fraction of a shift, it may be easier to calculate the holiday entitlement in hours. Here, each shift is 12 hours, and so the annual holiday entitlement would be 235.2 hours (19.6 shifts x 12 hours).

A calculation based on hours is also particularly useful where the length of shifts varies during the year.

How to calculate holiday entitlement for term-time or part-year workers?

Term-time workers should receive at least the statutory minimum entitlement of 5.6 weeks paid annual leave a year.

You can designate periods during the school holidays to be the term-time worker’s annual leave and pay holiday pay in instalments over the year.

Where a term-time worker has regular hours during term time and their salary is paid in equal instalments over the year, to ensure that they are receiving the minimum statutory paid holiday, you can add 5.6 weeks on to the number of weeks the employee is contracted to work during the year, before averaging their pay out into equal instalments.

For term-time workers with irregular hours, you can still pay holiday pay in instalments over the year (for example, monthly or at the end of each term) ensuring that it amounts to at least 5.6 weeks’ pay.

Workers who do not work a full year, such as permanent seasonal workers, are still entitled to 5.6 weeks’ paid holiday, even if this works out more favourably than comparable full-time workers when calculated as a proportion of the actual number of days worked during the year.

How do you calculate pro-rata holiday entitlement for employees starting part way through the year?

If you need to calculate holiday entitlement for an employee starting part way through your holiday year, you’ll need to work out what proportion of the year they will be working for you, and multiply this amount by the entitlement for a full-time employee.

Let’s assume you have an employee starting exactly ¼ of the way through your holiday year.

This means they’ll be entitled to ¾ of the full-time annual holiday entitlement.

Working with the statutory minimum of 28 days, this means they’ll be entitled to 21 days of holiday (28/4 =7, 7 x 3 =21) between the date they started working for you and the date your annual leave year resets.

See how our software can help

Our HR Software will help you save hours on HR admin.

 

Pro-rata holiday calculator

HR software like ours has a built-in holiday entitlement and pay calculator, making those trickier pro-rata holiday calculations speedy, straightforward, and with far less chance of error.

Get in touch on info@citrushr.com or give us a call on 0333 444 0165 to find out more about how our easy to use HR Software can save you huge amounts of time on HR admin.

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