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How to Calculate Employee Holiday Entitlement – Free Holiday Calculator

Calculate holiday entitlement with calculator

Holidays are a basic right for every worker. As the HR department of any company, you have to define a clear holiday policy in order to regulate and manage time off for your employees. This article will help you analyse how to calculate holiday entitlement, depending on different contracts and scenarios.

Overall, the main principle behind holiday entitlement is clear. Every year workers have the right to enjoy their well-deserved holidays. But how many days do they have? What if the worker has a part-time contract? How does coronavirus affect workers’ entitlement to holiday? What happens when an employee leaves the company and has not used all the vacations that they are entitled to? Do you need to calculate the proportion of days for an employee who has joined in the middle of the year? If so, do you know how to do it? These are all important questions that can affect how you calculate holiday entitlement.

Today we present you with a guide to everything you need to know when calculating holidays within a company, to clear up any impending doubts.


How many days of holiday is the worker entitled to per year?

Almost all workers (defined as those with a contract that are paid for their services) are entitled to 5.6 weeks of paid holiday a year, equivalent to 28 days. This is also known as statutory leave entitlement or annual leave.

UK Holiday entitlement background

Pre-October 1998, employees in the UK were not granted any statutory rights to have holiday leave from work, whether it be paid or unpaid. However, after the Working Time Regulations (WTR) were enforced, everything changed. Irrespective of what was stated on employees’ contracts, all workers became entitled to at least a minimum period of paid annual leave, regardless of the amount of time they have worked for the company.

4 of these weeks of annual leave are set by the EC Working Time Directive. The other 1.6 weeks are set by UK Law. Furthermore, England and Wales has 8 established public holidays: New Years Day, Good Friday, Easter Monday, the first and last Monday in May, the final Monday in August and Christmas and Boxing Day. It is customary in the UK that for full-time employees, the 8 days of public holidays are included in their 28 days of entitlement.

What is the difference between holidays, calendar days and working days?

Calendar days are every day of the year: 365 days, or 366 if it is a leap year. That is, from Monday to Sunday, each and every day. It is important not to confuse this with business days, which are non-public holidays (or “non-business days”).

On the other hand, we have working days, which are all days during which people work normally. Can Saturday be a working day? The answer is yes, however it depends on the contract, the activity in which the work is performed, the law, etc.

Holiday days are those in which a company employee has chosen NOT to work. The days which an employee takes off for holiday must fall on a working day. Since on holidays or non-working days, the worker is not obliged to work directly, unless his contract states that he must.

How to calculate holiday entitlement proportionally per month

You can manually calculate the number of days with a simple formula.

Formula to calculate holidays for days worked manually

Imagine your company’s holiday policy grants employees 28 days of holiday and if the employee joins on January 1st. To calculate their work-free days, you must divide the employee’s 28 days of holidays by 12 months. This gives you a total of 2.3 days off per month. Therefore, as the employee started in January, they will be working 12 months this year. This means the employee will have a total of 28 days of holiday at their disposal.

Using Factorial to manage the holidays, means that your employee holidays are calculated automatically. When you enter the employee’s data into Factorial, we calculate the number of days available for that worker based on the day they first started working for the company.

Holiday calculation in Excel

Managing your employees’ holidays on Excel is not uncommon in small businesses. With little background knowledge on how to use excel, a Human Resources manager can create a functional table to count the holiday days. Also using the addition, subtraction, division and multiplication formulas, they can get the totals or the pending vacations.

Click here to access our guide on how to manage time-off requests on Excel.

However, if Excel is not your thing and what you want is a template that you can fill out, you can download our 2021 Excel template for the management of your employees’ absences and vacations.

holiday entitlement calculator

Exceptions to holiday entitlement

How to calculate holiday entitlement for part-time workers

Employees that work part-time, will receive a pro-rata holiday entitlement. Meaning they will not receive the full amount, it will be proportional depending on the hours worked. Therefore, if an employee works 3 days a week, to calculate their holiday entitlement, you would simply work out 3 x 5.6, giving you 16.8 days off.

Holiday entitlement for employees who joined later in the year

Employees that joined the company halfway through the year for example will also receive a pro-rata entitlement of holiday. So if they were to have joined in March, the calculation would be 10 x 5.6, giving them 56 days off for that year.

Entitlement for employees that have been dismissed

Whatever the cause of the dismissal of the worker, they will have to be paid for the vacations not taken. Then, the equivalent of 2.3 days of holiday per working month must be paid to the employee.

How can I calculate the number of vacations not taken?

As previously stated, in the event that an employment contract is terminated, the employer must pay out the holidays that hadn’t been taken while working at the company. This includes workers who leave the company and have not been able to enjoy their entitled holidays.

In this case, you must calculate the holidays you are owed for the days that you have worked. For this, you can use the formula that we have indicated in the previous chapter. Then you must subtract this number from the vacations already taken.

And what happens if a year passes and a worker who still works for their company has not enjoyed all the vacations that he had to enjoy? Do you have to pay that amount? Do the holidays accumulate? Are they carried over to the following year?

In case this happens, the holidays can be accumulated for the following year. Then, the company will have to include in its holiday policy how long the employees will have to enjoy those holidays. Additionally, the UK government has announced that a maximum of 4 weeks of unused holidays is allowed to be carried over to the upcoming 2 years of leave. This is if that time has not been taken by an employee due to covid.

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How to Calculate Holiday Owed

Employees have the right to paid holidays (statutory annual leave) whether they work full time, part-time or under a zero-hour contract. The number of days an employee is entitled to depend on many factors. How many days or hours do they work each week or month? What annual allowance do they have? What is the total number of holidays they have accrued?

Given that there are so many things to consider, the best way to be sure no errors are made is to use a holiday calculator. But before we look at how a holiday calculator could help you, let’s break down holiday pay and entitlement by the employment contract.

Holiday Pay: Full Time and Variable Hour Employees

The UK Working Time Regulations (1998) states that full-time employees are entitled to 5.6 weeks of holiday leave every year (28 days). For those employees on a fixed monthly salary. Therefore, if they take a week’s holiday, they will receive the same pay at the end of the month as they normally receive. Generally speaking, calculating holidays for full-time employees is relatively simple. Issues only arise when an employee starts or leaves partway through the holiday year (a holiday calculator is an invaluable tool in these cases).

If an employee is part-time and works fewer hours each week, they will receive less paid holiday allowance. They are still entitled to 5.6 weeks of paid leave but in proportion to the hours that they actually work. This is simple enough if they work a set number of hours per week.

However, if an employee works variable hours then things can be a bit more challenging. In the past, an employer would look back at a worker’s previous 12 paid weeks, known as the holiday pay reference period. This reference period has now changed to 52 weeks. For those workers who have been working for less than 52 weeks, the reference period is the total number of weeks they have worked. Employers should be aware of this change as it could have a direct impact on the rights of their employees.

Holiday Calculator: Part-Time Staff

We’ve looked at full time and variable hour employees, but what about part-time staff?

The entitlement for part-time employees is calculated pro-rata. So if, for example, an employee works 3 days a week, they would be entitled to 3 x 5.6 = 16.8 days of holiday entitlement per year. If your employees get a contractual holiday allowance on top of their statutory entitlement, this needs to be calculated pro-rata for part-time employees too. The same goes for bank holidays. A good holiday calculator can help you work out statutory holiday leave in days or hours for part-time staff. With most, you can calculate for a full year or a pro-rata value for any part of the year.

Download Factorial’s Free 2022 Annual Leave Tracker

Factorial’s Holiday Calculator

At Factorial, we have designed a free holiday tracker to save you time and help you avoid errors. You can use our holiday calculator to work out prorated annual leave entitlements for part-time staff. You can also use it to calculate holiday allowances for employees who start or end their employment with you in the middle of the year. Just enter how many days a week an employee works, what your holiday entitlement is for a full-time employee, and whether or not they started accruing holidays part way through the year, and we will do the rest! No more headaches and no more wondering if calculations are right for all employees. A holiday calculator helps you ensure you comply with all related regulations.

Calculating Holiday Owed with Time Off Software

Aside from using a reliable holiday calculator, the most important thing to consider when it comes to calculating holiday entitlement is time off. If you have a range of contract types, this can be a time-consuming and complex process. And your holiday calculations won’t matter if you are not 100% sure what hours each employee works. They also won’t be worth anything if you have no reliable record of how much time off an employee has already taken.

The best way to make sure your holiday entitlement calculations are accurate is to implement a software solution. This will simplify the process and save you time. It will also help ensure you are maintaining accurate and reliable data for all your employees.

With Factorial’s Time Off Software, you can keep track of all the data you need. Our software solution acts as an automated holiday entitlement calculator for your organisation. It also provides a useful platform for staff to make holiday requests and track their remaining holidays. Armed with our free holiday calculator and our unique software solution, headaches from calculating employee holidays will become a thing of the past. Instead, you can rest assured that data is reliable and accurate and each employee receives the right paid holiday allowance.

Try Factorial’s Time Off Software today and receive your 14-day free trial!

calculating UK holiday

Why Calculating Holiday Pay Can be Confusing

Calculating holiday entitlements can be confusing for an employer. This is especially true if you employ full time, part-time and variable hour employees. Not to mention what a headache it can be if you have staff on zero-hour contracts. In this article, we will share a guide on how to work out holiday entitlement and pay. We will also look at the benefits of using a holiday calculator and HR software to make your life easier.

Despite a number of high profile cases in the media over recent years, many employers are still making mistakes when it comes to managing time off and calculating holiday pay. Many calculate it based solely on basic pay, contracted salary and working hours. Some don’t include commission payments. For others, confusion arises when it comes to employees on part-time or zero-hour contracts. As an employer, it is important to get it right.

One important factor that has added to this confusion is the number of significant rulings over the past decade. The following cases have had an impact on the regulations for holiday pay and entitlement:

  • Lock v British Gas Trading Ltd (2014): as a result of a claim filed by Mr Lock, a sales consultant for British Gas, the Court of Appeal determined that holiday pay must be calculated on the basis of commission earnings, not just basic salary. This ensures workers receive normal pay whilst on holiday.
  • In the case of Bear Scotland v Fulton, which attracted a great deal of media attention, the Employment Appeal Tribunal (EAT) ruled that any overtime an employee is obliged to perform must be included in holiday pay calculations. However, this ruling only applies to the 4 weeks of annual leave provided for by the Working Time Directive. It does not apply to the 1.6 weeks of additional leave granted by the Working Time Regulations.
  • A ruling by the EAT in 2019, as a result of the Harper Trust v Brazel case, clarified that holiday pay should not be prorated for staff who work only part of the year. This takes into account workers on short-term contracts, variable hour employees and staff on zero-hour contracts.

All of these complications can easily be simplified by using Factorial’s easy to use intuitive software. Factorial automatically works out how much holiday each employee is entitled to depending on their contract. Saving you time, money and hassle.

 

Try Factorial today for your 14-day free trial!

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