How to calculate holiday pay (Part 1)
Everyone seems to find holiday pay calculations particularly complicated and confusing. So we've written a series of articles to try to clarify matters a bit by explaining some of the underlying maths.
This is the first episode of the series. If you'd like to know more, continue reading with the next episode.
Contractual holiday entitlement of 28 days
You might be used to seeing contractual holiday entitlement for full-time staff expressed something like '28 days including bank holidays', with the entitlement for part-time staff being calculated on a pro-rata basis.
So, if a part-time employee only works a four day week as opposed to the full-time five, they are entitled to 4/5 of the full-time allowance, which in this case is 4/5 x 28 = 22.4 days.
Make sense so far?
Contractual holiday entitlement of 5.6 weeks
You might not have considered this, but having to pro-rata holiday entitlement for part-time employees in this manner means that it's actually neater to express contractual holiday entitlements in terms of weeks rather than days, such as '5.6 weeks including bank holidays'.
This might come as a bit of a surprise, given the prevalence of employment contracts explicitly specifying '28 days'.
Now you may not see any difference here, since 5.6 weeks is exactly the same as 28 days for a full-time 5-day-week worker, right?
But the clever part is that because you are talking about *their* weeks, you now don't need to worry about any pro-rata calculation for part-time employees, it's built in.
Both the 5-day and 4-day worker are equally entitled to 5.6 weeks holiday.
It's just that the 4-day worker's holiday weeks only have four days in them (ie the days they'd normally work), not five.
For the sake of completeness, note that the statutory minimum holiday entitlement is specifically capped by the legislation at 28 days, so 6-day workers aren't legally entitled get any more holiday than 5-day workers. Of course, you're free to contractually give them 5.6 weeks (= 5.6 x 6 = 33.6 days) if you want to.