how-to-run-a-small-business

How to calculate holiday allowance for your business

Understanding how to calculate holiday allowance can be a confusing process. There are a host of different factors at play, and sometimes making the calculation doesn’t feel straightforward. In this article, we’re going to show you how to calculate holiday allowance for your team – both for full-time and part-time workers.

All UK employees are entitled to 5.6 weeks’ paid holiday per year – this is a statutory right protected by UK law. This entitlement is the same whether your employees are agency workers, working irregular hours or on a zero-hours contract.

However, the way in which that holiday allowance is calculated (and how many days of leave that comes to) will differ depending on the employee and their working arrangement.

Sound complicated? Let’s break it down into simpler terms.

How to calculate holiday allowance for your team

So – all UK employees are entitled to 5.6 weeks of holiday a year. But what constitutes ‘a week’ will differ depending on the employee.

If your team works a 5-day week, the calculation looks like this:

5-day week = 5

Annual holiday entitlement = 5.6

5 x 5.6 = 28 days.

So if your team works 5-day weeks, they are entitled to a minimum of 28 days’ paid annual leave every year – because that is the equivalent of 5.6 weeks of holiday. You could give them more if you wanted to, but you can’t give them less.

But what if you have an employee working part-time, not on a 5-day working week

How to calculate holiday allowance for part-time employees

Now, part-time workers are still entitled to 5.6 weeks of annual leave – but as their weeks are shorter than the 5-day working week, their annual holiday entitlement will be lower as well.

Let’s say one of your team members only works two days per week. In that case, the calculation looks like this:

2-day week = 2

Annual holiday entitlement = 5.6

2 x 5.6 = 11.2

In the case of a part-time employee working 2 days per week, their annual holiday entitlement would be 11.2 days a year.

Employing somebody part-time? Use our quick and easy holiday calculator to find out how much annual leave they are entitled to.  

Bank holidays

It’s important to remember that you can count UK Bank Holidays as part of your team’s statutory holiday entitlement. You don’t have to, but you can if you wish.

Limits to statutory leave

Statutory paid leave is capped at 28 days per year. You may choose as an employer to give your team more paid holiday than this, but this is your choice.

What do I do if someone joins my team halfway through the year?

In this case, you need to prorate your employee’s holiday allowance to take into account when they joined your company. In simple terms, that means if someone joined your company 50% through the year, they are entitled to 50% of statutory holiday allowance.

Use our handy holiday calculator to make sure you get this calculation right.

If you are a CharlieHR user, then this calculation is handled automatically. Find out more about our system here.

Carrying over annual leave

Employees are allowed to carry a maximum of eight days annual leave over into a new year – but only if this has been agreed with their employer in their contract.

comments powered by Disqus

At Charlie we're on a mission to make every small company a great place to work. Try our software for free and find out for yourself.