Your Guide To Annual Leave Calculations
Here at Avensure we are often asked to assist our clients with annual leave calculations.
Many employers feel a little reluctant to admit these calculations give them a headache, but the truth is they baffle most of us. Add to that the fact that now more than ever the working patterns of our workforce are changing and it’s fair to say that holiday calculations just seem to get more and more complex.
Here we look at how to calculate annual leave- from those who work set days every week to term-time working and temporary contracts.
What is the holiday entitlement in the UK?
The entitlement is 5.6 weeks or 28 days each year for someone working 5 days a week. This can include the 8 statutory bank/public holidays.
I give my staff more than 28 days per year; how do I work out our entitlement in weeks?
The 5.6 week figure comes from dividing the 28 day entitlement by the 5 days a week worked to give 5.6 weeks.
So, if for example, you give your staff a total of 30 days this would be 30 ÷ 5 = 6 weeks of annual leave each year.
Do I have to work out bank holidays separately?
No. You will just overcomplicate things.
When calculating annual leave, just focus on the total number of days including the bank holidays. Your calculation will always be fair because you are using the same calculation for everyone. This will become clear as we work through the examples.
Please see our previous article on Bank Holidays for more information here.
Examples of annual leave calculations
Please note, the examples below are based on the statutory annual leave entitlement of 5.6 weeks per year including bank holidays. Calculations will need to be adjusted if you offer a higher annual leave entitlement.
- Holiday calculations for those working set days each week- full and part-time.
Someone working 5 days a week whether its Monday to Friday, Tuesday to Saturday or Monday to Thursday and every Sunday, each will receive 28 days holiday per year. Someone who works a set number of days each week but works fewer than 5 days a week will receive 28 days pro rata.
To work this out you take the number of days they work each week and multiply it by 5.6 weeks. For example, someone working 3 days a week will receive 3 x 5.6 = 16.8 days per year. You are advised to round up to the nearest half day. So, in this instance a 3 day a week worker will receive 17 days leave per year.
- Holiday calculation for new starters and leavers
Usually, holiday entitlements are calculated based upon full months of service- check your handbooks and contracts. So, 28 days annual leave accrues at a rate of 2.33 days per month (28 days ÷ 12 months).
Therefore, you multiply 2.33 by the number of months left in the holiday year for someone starting work with you part way through the holiday year and multiply 2.33 by the number of months which have passed in the holiday year for someone who is leaving.
Example 1. Your holiday year commences on 1st Jan and ends on 31st Dec. You have a new starter (full time) commencing in April, this is 4 months into the holiday year.
Therefore, their entitlement for their first year of employment is 2.33 x 8 (i.e., the number of months left in the holiday year) = 18.64 (round up) gives an annual leave entitlement of 19 days for their first year of employment.
Example 2. Your holiday year commences on 1st April and ends on 31st March. You have an employee who is leaving at the end of October. This is 7 months into the holiday year and they have taken 5 days off including time off for bank holidays. They are full time.
2.33 x 7 (the months they have worked) = accrual of 16.31 days (round up) to 16.5 days. They have taken 5 days, so they are entitled to be paid for 11.5 days in their final wages/salary payment.
- Holiday calculation for those working a different number of days on a rota system.
For example, an employee who works 3 days per week one week and then 3.5 days the next across a two-week rota.
Firstly, we need to calculate the average working week, so in this example 3 + 3.5 = 6.5 then ÷ 2 (the number of weeks on the rota) = 3.25 average working week. To work out the holiday entitlement we multiply 5.6 weeks by the average working week i.e., 5.6 x 3.25 = 18.2.
So, in this example this person would have an annual holiday entitlement of 18.5 days (rounding up to nearest half day).
- Calculating Annual Leave for shift workers
Where someone works a shift pattern, such as the continental shift pattern of 4 days on, 4 days off.
The full time entitlement is 28 days/5.6 weeks, inclusive of bank holidays.
- Express leave in ‘shifts’ rather than days or weeks.
- First work out the average number of shifts in a week.
- In this example its 365 ÷ 8 day week shift pattern= 45.625 shift weeks per year.
- 4 shifts x 45.625 ÷ 52 weeks = 3.5 12 hour shifts on average per week.
- 6 x 3.5 = 20 12-hour shifts holiday per year (19.6)
You may find it easier to express the holiday in hours, which is 19.6 x 12 (the number of hours in one shift) = 235.2 hours holiday per year.
- Holiday calculations for those who have irregular working patterns.
You never know how many hours someone on this type of contract will work. They won’t have a set working pattern or a set number of days.
Therefore, you can’t tell them what their leave entitlement will be, other than to say that it will be based on whatever your leave entitlement is, say 5.6 weeks/28 days.
Therefore, annual leave accrues based on the hours they work.
For example, someone who has worked 35 hours.
You give 5.6 weeks leave a year inclusive of bank holidays.
Annual leave can only accrue during working weeks. A company offering a leave entitlement of 5.6 weeks has a 46.4 week working year (52 – 5.6).
We need to work out the leave accrual based on the percentage of the hours worked.
5.6 weeks = 12.07% of the hours worked
(12.07% is 5.6 ÷ 46.4 x 100)
12.07% of 35 hours worked = 4.22 hours annual leave (35/100 x 12.07)
- Holiday calculations for those working term-time only
Whether you run an establishment such as a nursery and are only open during term time or offer term-time working as a means of offering more choice and flexibility to your workforce, there is a specific means of working out the holiday entitlement.
The holiday entitlement will depend on the length of the ‘term’. Term-time can vary from 38 to 40 weeks.
Someone who is employed on a term-time basis based on a 39-week term and is full time, will be entitled to 4.71 weeks leave or 23.54 days (round up) to 24 days leave per year. Here’s how you work that out:
39 ÷ 46.4 x 5.6 = 4.71
39 is the number of weeks in the term
46.4 is the number of actual working weeks in the year minus the 5.6-week statutory holiday figure.
If, like me, numbers give you a headache, don’t forget you can contact our experts who will be happy to assist you with any annual leave calculations you have, or we can check any calculations for you.
It’s vital to get this right otherwise you face backdated claims for holiday pay which can prove to be costly for your business.