The easiest way to calculate your employees’ holiday allowance

Running your own business comes with many challenges, but one of the most annoying must be trying to work out holiday allowances. When you add in Bank Holidays and pro-rata allowances for part-time staff, you won’t be the only business owner tearing their hair out trying to get it right!

Ensuring your team get the correct amount of holiday is not only a legal requirement, but it’s also crucial for maintaining a happy and motivated workforce.

So here are our quick and easy rules for the easy way to calculate your employees’ holiday allowance (including those pesky Bank Holidays and part-time days!).

The Statutory Holiday Entitlement

In the UK, all employees are entitled to a minimum of 5.6 weeks of paid holiday each year. This entitlement includes annual leave and bank holidays.

For full-time staff working five days a week, this equates to 28 days of paid holiday every year. However, the way you choose to allocate these days can vary based on your business.

Bank Holidays

The UK has eight standard bank holidays: New Year's Day, Good Friday, Easter Monday, Early May Bank Holiday, Spring Bank Holiday, Summer Bank Holiday, Christmas Day, and Boxing Day. Employers can choose to include these bank holidays as part of the 28-day statutory leave or offer them in addition to the statutory entitlement. It’s essential to clearly outline your company policy on bank holidays in employment contracts to avoid any confusion.

Calculating pro-rated holidays

Employees who work part-time or start/leave employment partway through the year are entitled to a pro-rated holiday allowance. The easiest way to calculate pro-rated holidays is by using the following formula:

(Pro-Rated Holiday Entitlement) = (Annual Entitlement) x (Number of Days Worked per Week / Number of Full-Time Days per Week)

For example, if a part-time employee works three days a week and the full-time entitlement is 28 days, the calculation would be:

(Pro-Rated Holiday Entitlement) = 28 days x (3 / 5) = 16.8 days

This means the part-time employee is entitled to 16.8 days of paid holiday per year.

What about shift workers?

Different working patterns, such as shift work and irregular hours, can complicate holiday calculations.

For employees working shifts of varying lengths, calculate their holiday entitlement based on the total number of hours worked. For example, if an employee works 1,500 hours a year and the full-time equivalent is 1,950 hours, their holiday entitlement would be:

(Pro-Rated Holiday Entitlement) = 28 days x (1,500 / 1,950) = 21.5 days

Ensure that you adjust the entitlement based on the actual hours worked.

For employees with irregular working hours, calculate their holiday entitlement based on the average number of hours worked over a set reference period (typically 52 weeks). This approach ensures that holiday calculations reflect their actual working patterns.

Need an even quicker way?

Our clever HR software WHR People works out holiday allowance for you, as well as tracking lots of other useful things like sick days, overtime, expenses, timesheets and health & safety training.

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