|
To find out how we can make such an impact on your recruitment needs
Contact us on:
Northampton
01604 239555
Kettering
01536 416615
|
|
 |
|
|
|
| Industry News |
 |
PAYROLL
April 2009
PAYROLL
CALCULATING PAID LEAVE ENTITLEMENT ON TERMINATION
As you know since April 1 2009 employees have been entitled to increased annual leave. But if someone leaves part-way through your holiday year, what’s the best way to calculate their accrued holiday entitlement?
Bring on more holiday
On April 1 2009, employees were given an increased statutory entitlement to paid annual leave. The minimum is now 5.6 weeks, or 28 days, for those who work a five-day week. This can, and often does, include statutory public holidays. Part-timers are entitled to the same amount, but on a pro rata basis. Sounds easy enough, but how do you calculate an employees holiday entitlement if they leave part-way through a year?
When do they work?
First of all, you need to work out the employee’s total annual leave entitlement.
Full time. For an employee who works a five day week, their minimum entitlement is calculated as follows: 5.6 x 5 days = 28 days holiday
Part time For those working a three day week, it will be 16.8 days, i.e. 5.6 x 3 = 16.8 days holiday
Bare minimum
Remember that 5.6 weeks’ holiday is the employee’s statutory minimum entitlement. If your contracts provide for more paid leave than this, e.g. if you offer 6.6 weeks (or 33 days’ holiday), you will need to substitute that figure in your calculation.
Tip. The statutory entitlement is capped at 28 days. So employees who work six days per week don’t get any more holiday.
Calculating entitlement
Next, you need to calculate the period of time between the start of your holiday year and the date the employment will come to an end. There’s actually two ways to calculate their entitlement.
Example
Let’s suppose that your holiday leave runs from April 1 to March 31 and a five day week employee is due to leave on October 15. They have already taken four days holiday since April 1.
In months. The first method is to use whole months for the calculation. So here they would be entitled to five months, ie. April 1 to September 30, which gives them ten days’ holiday pay. This is:
28 days’ holiday x 6 months divided by 12 = 14 days – 4 days’ holiday already taken = 10 days’ holiday pay
In days. Alternatively you could use days for the calculation, i.e. 198 days from April 1 to October 15. Using this formula the same employee would be entitled to 11.18 days.:
28 days’ holiday x 198 days divided by 365 = 15.18 days – 4 days already taken = 11.18 days’ holiday pay.
Tip. It is much better to use months to calculate holiday entitlement, Doing it this way will usually result in a lower figure – and less holiday pay,
Excessive holiday
If the employee has taken more holiday than they are entitled to, you cannot recover the overpayment without having the contractual right to do so. Without this, the employee could argue it’s an unlawful deduction of wages.
When calculating holiday pay entitlement for leavers, use months rather than days. As in our example, you will end up paying less holiday pay using this method. Don’t forget you can only recover overpayments if you have retained the contractual right to do so, otherwise it will be an unlawful deduction of wages.
Source: Tips & Advice Personnel April 20 2009
« back
|
|
|
