This article explains how Kobas calculates holiday figures for staff on Irregular Hours contracts in the UK (excluding Northern Ireland).
Last updated 08 Oct 2024
Jump to:
Warning: This article applies only to new holiday years starting on or after 1st April 2024. Please see here for holiday years starting before this date.
Introduction
This article explains how Kobas calculates Holiday Allowance, Accrual, and pay for those days when a staff member is on an Irregular Hours contract (where there are no set guaranteed hours). This page works through the three calculation elements:
- Allowance (what staff are entitled to for the year)
- Accrual (how this allowance is earned throughout the year)
- Value (how much staff are paid for each holiday day)
Further information can be found on the United Kingdom government website.
Note: Please note that we are not responsible for the content of external websites. Whilst Kobas makes every effort to ensure our calculations are accurate, we cannot be held responsible for inaccurate payments to staff.
Holiday Allowance and Accrual
Staff with no fixed contractual hours will earn 12.07% of the hours they work as a holiday, up to a maximum of 5.6 weeks (28 days).
Calculations
- Calculate the holiday accrual multiplier: (total holiday entitlement ÷ remaining working weeks in the year) x 100
Example:
If your holiday allowance is the statutory minimum of 5.6 weeks: (5.6 / 46.4) * 100 = 12.07
2. Divide the hours worked in the pay period by 100
3. Multiply the answer to Step 1 by the number from point 1 (e.g. 12.07)
4. Round up or down to the nearest hour
Note: Kobas updates these calculations overnight each day. Therefore, some changes made may not show within accrual and associated figures until the following morning.
Holiday Pay
Holiday Day Pay
This method means paying Irregular Hour staff their hourly rate when they take their leave. For employees with irregular hours, holiday pay is based on their average weekly pay over the previous 52 weeks. This includes overtime, commission, and bonuses.
Average weekly pay = Total pay over 52 weeks / 52 weeks
Holiday pay per day = Average weekly pay / Number of working days in a week
Rolled up Holiday Pay
For holiday years starting after 1st April 2024, employers can use rolled-up holiday pay only for irregular-hour workers and part-year workers.
- We start with the Full Year Allowance (typically 5.6 weeks).
- They then increase the employee's base pay by a percentage to account for the included holiday pay. This percentage typically reflects the statutory minimum holiday entitlement (12.07% for 5.6 weeks).
- The employee receives this higher base pay throughout the year, regardless of whether they take holidays.
- We multiply the hours worked in that month, which is ending by 12.07%.
Example:
An employee with a £10 hourly rate is entitled to 5.6 weeks of holiday.
The employer decides to use rolled-up holiday pay.
They increase the employee's base pay by 12.07% (£10 x 12.07% = £1.21).
The employee now receives a new hourly rate of £11.21.
Note: If you choose to pay your Irregular-Hours staff through Rolled Up Holiday Pay, you can turn this setting on in Kobas System Preferences.
Leaving and starting mid-year
Due to this being an accrual method, staff starting mid-year will begin to accrue from when they start.
Where staff are paid using the Rolled Up Holiday Pay, leaving mid-year will not require any further calculations as staff are enumerated for their leave as they are paid.
Staff who leave mid-year should be paid their Holiday Pay as a rolled-up amount in their final pay, it should be: ACCRUED TO DATE (ON LAST DAY) - HOLIDAY TAKEN