Holiday calculations: Irregular Hours (UK exc. NI)

This article explains how Kobas calculates holiday figures for staff on Irregular Hours contracts in the UK (excluding Northern Ireland).

Last updated 27 Apr 2024

Jump to:

• Introduction
• Holiday Allowance and Accrual
• Holiday Pay options
• Leaving and starting mid-year

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:

1. Allowance (what staff are entitled to for the year)
2. Accrual (how this allowance is earned throughout the year)
3. Value (how much staff are paid for each holiday day)

Further information can be found on the United Kingdom government website.

Holiday Allowance and Accrual

Staff that have no fixed contractual hours will earn 12.07% of the hours they work as a holiday, up to the maximum of 5.6 weeks (28 days).

Calculations

1. 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 

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

As of April 1, 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.

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.

• Step 1: Find accrued holiday entitlement:

  • Divide their total annual entitlement (5.6 weeks) by the number of weeks in a year (52). This gives you the entitlement per week.
  • Multiply the entitlement per week by the number of whole weeks they've worked.

• Step 2: Calculate holiday pay per day:

  • Divide their average weekly pay (including the rolled-up holiday pay) by the number of working days in a week.

• Step 3: Calculate pro-rated entitlement:

  • Divide their total annual entitlement by 52 weeks.
  • Multiply this number by the number of whole weeks they've worked since starting.

• Step 4: Find earned holiday pay:

  • Multiply the holiday pay per day by the number of earned holiday days (pro-rated entitlement).

• This is the amount you should include in their regular wages as rolled-up holiday pay.