Member Article

How to calculate employee holiday entitlements

For businesses with more than a few employees, managing holiday entitlements of your employees can become a cumbersome task unless you know what you’re doing.

Here’s a brief guide to get you started which we hope you’ll find useful.

Firstly, you should know that any employee’s paid annual holiday leave entitlement begins from the first day of their employment and isn’t subject to a minimum period of employment.

Workers have the following rights:

  • To get paid for any leave as per their employment contract and statutory regulations
  • To build up holiday entitlement during the following types of leave: maternity, paternity or adoption
  • To build up holiday entitlement when they are off work sick
  • To choose to take holiday leave during periods of sickness absence

Statutory holidays

By law, you’re required to give 5.6 weeks of paid holiday per year (including public holidays) to an employee which equates to 28 days for workers who work a 5 day week. Of course, as part of your company’s approach for attracting and retaining talent, you may wish to offer paid holidays over and above the statutory minimum.

The 5.6 weeks statutory holiday includes bank holidays. However, employees do not have the automatic right to take time off on the actual bank holiday dates unless it is specified in their employment contract.

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Carrying over holiday entitlements

At the end of a leave year, there may be times when an employee has some leftover days of untaken holidays. You should not allow your employees to carry over the statutory part of their holiday allowance (4 weeks) from one holiday year to another. You can, however, allow them to carry over any holiday in excess of the statutory minimum. For example, if you offer employees 25 days holiday per year, plus public holidays, you could allow employees to carry over up to 5 days of this.

Calculating holiday pay

A worker is entitled to be paid at the rate of a “week’s pay” for each week of holiday.

  • For employees who have fixed working hours and pay, they would be paid as normal as per their employment contract. Normally, overtime pay is not normally counted when calculating the holiday pay.
  • For an employee with fixed hours and variable pay (which could include bonus and commission, a week’s pay is calculated using the average pay for the previous 12 weeks
  • For an employee with no fixed working hours, a week’s pay is the average pay made in the previous 12 weeks. If the employee was not paid in any of those weeks, pay from earlier weeks should be taken into account to bring the total of paid weeks up to 12.

Article by Stuart Hearn, CEO of

This was posted in Bdaily's Members' News section by Onetouchteam .

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