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How to Calculate Pro Rata Holiday Entitlement the Right Way

Craig Hynd |

Category

Youmanage
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Calculating employee holiday entitlement for part-time employees has always been difficult and frustrating.

You can use Excel, or some companies offer a basic online calculator – however, you still have to manually input figures for each employee.

You don't need a separate online pro rata holiday calculator to work out your employees' holiday allowance.

And we’ll tell you why.

But first, let’s start with the basics.

What does pro-rata holiday entitlement mean?

The statutory minimum holiday requirement for workers in the UK is 5.6 weeks (or 28 days), which can include bank and public holidays. But organisations can also choose how much annual leave they give to their employees – as long as it meets the legal minimum of 28 days.

Part-time employees are entitled to a pro-rated amount, which is calculated at 5.6 times their usual working week. For example, someone who works four days per week would be entitled to 22.4 days’ holiday (5.6 x 4).

In the UK, there is no legal right to paid leave on bank holidays. Therefore, any right to time off will depend on the contracts your workers have.

It can be a condition of their employment that employees have to take bank holidays as annual leave, or they can be in addition to annual leave.

For example, there are eight bank holidays a year, so employees can either be given 20 days plus bank holidays – which gives the statutory minimum of 28 days – or include them, which would mean 28 days’ annual leave that they can take when they choose to.

As the vast majority of bank holidays fall on a Monday or Friday, part-time employees who don’t work on these days will be entitled to proportionately fewer days off than full-time employees who regularly work on these days.

To avoid this, part-time employees should be given a pro-rated entitlement to time off in lieu of bank holidays according to the number of hours they work.

How to pro-rate annual leave entitlement for employees starting part-way through the year

If you have employees who start part-way through the year, then you should calculate their entitlement based on the amount of time they have worked for your organisation to obtain a proportionate amount based on their full entitlement.

For example, if you have a new member of staff who joined on 1st July, their holiday allowance will be calculated from 1st July to 31st December. Employees accrue holidays at a rate of 1/12 for each month, so in this example the employee would be entitled to 6/12 of a full year’s annual leave entitlement.

How to pro-rate annual leave entitlement for employees leaving part-way through the year

Employees who leave your company part-way through the year should have their entitlement calculated from the start of the holiday year to the date they leave.

For example, if your holiday year runs from January to December, and the employee in question leaves on 1st July, their holiday allowance will be calculated from 1st January to 1st July.

If the employee has taken more holidays than they’re entitled to before they leave, then you can deduct money from their final monthly salary amount, but this needs to be agreed in writing.

If they’ve taken fewer holidays than they’re entitled to before they leave, then you can offer them payment in lieu.

How to calculate pro-rated holiday entitlement for part-time staff working in days and hours

Many companies have staff that work shift patterns with erratic hours, which is common in industries such as health care, hospitality, logistics, and manufacturing.

For these employees, you should calculate their annual leave entitlement based on the average hours they worked over the previous 12 weeks.

We believe things should be done differently.

The time, effort, and expense of pro-rating holidays for part-time workers is completely unnecessary in 2019. Other HR systems don't have the capability to do this for you, and even have the audacity of directing you to a simple and basic online calculator.

You deserve better.

Youmanage uses advanced automation to automatically determine these complex pro-rated holiday entitlement calculations. The automatic calculations include pro-rating for new starters, leavers, and changes to contracted hours part-way through the entitlement year.

This is just one of many exclusive features that Youmanage has in its arsenal. Explore our blog, check out our website, or feel free to get in touch with our friendly team to find out more.

Switch to Youmanage today. Do what others can't.

Go here to arrange a tailored one-to-one demo of Youmanage and experience the automated, fully-configurable, customer-led HR software platform.

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