Calculating holiday entitlement
Holiday entitlement can be difficult to calculate. There are so many variables to take into account; is the employee working full-time or part-time? Are they in a temporary position? Is the employee getting all bank holidays as paid days off, or only the statutory entitlement? And last, but not least: what does the term pro rata actually mean?
Holiday can only be taken as it has been accrued, so if the employee takes more time off than they are entitled to for the duration of their employment, the employer has the right to withhold a portion of their final salary as compensation. Stafftax will help with this calculation.
All employees in the UK are entitled by law to 5.6 weeks holiday per annum. For a full-time employee that is 28 paid days off per year, of which 4 weeks (20 days) is standard leave and 1.6 weeks (8 days) is all 8 of the bank holidays.
Part-time and temp employees
What if the domestic employee is only working part-time? The calculation is simple. Multiply the number of days the employee works by 5.6. As before; if the employer is happy to let their employee have all bank holidays off, that's fine.
If the worker is employed on a temporary basis then they are also entitled to holiday. The calculation of the holiday entitlement for a temp employee in a full-time position is straight forward: divide 28 (the total number of days they would be entitled to if they were working the whole year) by 52 (the total number of weeks in a year). Then you simply multiply the answer with the number of weeks the employee has been contracted to work for.
Example 1: Employee A has been hired to work for 5 days per week for 16 weeks:
28 / 52 = 0.54 * 16 = 8.6
The holiday entitlement for Employee A is 8.6 days.
If the worker is employed on a part-time basis in a temporary position the calculation is a little bit more complex. First you need to establish the annual entitlement if they were working the whole year. As before, you simply multiply the number of days they work per week by 5.6. Then you follow the steps as outlined in the calculation above.
Example 2: Employee B has been employed to work for three days per week for 6 weeks:
5.6 * 3 = 16.8 / 52 = 0.323 * 6 = 1.9
Holiday entitlement for Employee B is 1.9 days.
Pro rata is a word that pops up frequently whenever you're dealing with a part-time employment. Just like the salary will be calculated on a pro rata basis so will the holiday entitlement. Pro rata is Latin for "proportionally" or "a proportion of" and it simply means that the part-timer's entitlement is calculated according to what proportion of a full-time job their hours make up.