How to Calculate Holiday Entitlement for Irregular Hours and Part-Year Workers

Calculating holiday entitlement in 2024

When looking at how to calculate holiday entitlement for irregular hours and part-year workers you first need to be aware of the new UK holiday entitlement payroll legislation.

Several changes are coming in for 2024 to ensure transparency, avoid payroll errors and make things fairer for workers.

This means processing payroll will change slightly so we’ve created this short guide on how to calculate holiday pay for these workers.

How to Calculate Holiday Entitlement for Irregular Hours and Part-Year Workers

This is a method you can use to calculate holiday pay.

1. Calculate Hours Worked

Firstly multiply the number of hours worked by the employee by 12.07%. As an example we’re using an employee who has worked 100 hours to explain this easily for you.

Person X worked 100 hours in a week and has therefore accrued 12.07 hours of holiday in that week.

2. Calculate Holiday Pay Annually

Next you need to calculate their holiday pay, this is based on a 52-week reference period, you do this by dividing the number of hours worked (including overtime, regular bonuses and commission) by the total pay in that reference period.

3. Omissions for holiday pay

To complicate matters, you aren’t allowed to take into account for example SSP or other absences in that reference period (because this will reduce the total pay amount, potentially under minimum wage), so if your employee has taken 5 weeks of holiday within that reference period you need to change your period from 52 weeks to 57 weeks and exclude the holiday that has been taken. You can do this up to a maximum of 104 weeks.

4. Calculate Holiday Entitlement

The Employee has taken 5 weeks holiday in the last 52 weeks, therefore you need to use 57 weeks worth of pay data for your reference period.

They worked a total of 2210 hours in that reference period, divide that by the total amount of pay in that reference period £37,625 (for example) and you have your hourly pay to pay for holiday pay £12.50.

The 4 weeks and 1.6 weeks holiday rule

In addition, 4 weeks of this holiday entitlement must be paid at a worker’s ‘normal’ rate of pay (as calculated above), and the remaining 1.6 weeks’ entitlement can be paid at ‘basic’ rate of pay, that is, the worker’s basic remuneration.

You can also use this link from the government as an extra tool to calculate holiday.

We’ve shared more about the changing UK holiday entitlement for irregular hours and part time workers.

UK Holiday entitlement changes

Support with holiday pay calculations

Payroll admin can take up a considerable amount of time and accuracy is key. If you need support from a knowledgeable, responsive team get in touch with our Talk Staff payroll department for extra outsourced payroll support.

Payroll Services UK – From Talk Staff

Please note that the information in this blog was created based on the integrity of reputable links at the time of publishing. These blogs should be used for guidance only, you should always check information further before taking action as sources may update over time. Talk Staff holds no responsibility for implementation or loss

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    Last Updated on 3 months by Hannah Ingram

    Last Updated on 3 months by Hannah Ingram