WFM UK: Holidays - Additional Holiday Pay

Additional Holiday Pay

Additional Holiday Pay is made to employees on top of their basic holiday pay. It is used to account for variable payments that an employee may receive. The idea is that the employee should not miss out on these variable earnings due to taking a holiday. The system contains an 'Additional Holiday Pay' Payment Type, that other Payment Types (commissions, overtime, bonuses, etc) can be configured to use.

This article provides instructions for using the ‘Additional Holiday Pay’ Payment Type in the Payroll module and an explanation of how Additional Holiday Pay is calculated.

These tasks are typically performed by payroll administrators.

 

Payment Types

To include certain Payment Types in Additional Holiday Pay:

• Go to Payroll > Administration > Payment Types
• Select a Payment Type from the list ('Overtime', for example)

Fig.1 - Selecting a Payment Type

• Tick the box against Include in Holiday Pay 
• Scroll down and Save

Fig.2 - Payment Type setting - 'Include in Holiday Pay'

Then, all employees who receive that Payment Type and take holiday, will have that calculation applied to their holiday pay (depending on Global Settings, explained below).

 

Global Settings

• Go to HR > Administration > Global Settings > Edit Default Holiday Settings > Holiday Calculations

Fig.3 - Global Settings - Additional Holiday Pay

Standard Setup

This will calculate Additional Holiday Pay based on the employees' holiday start year as defined within the HR module.

• Select Use Holiday Start Year Range for Additional Holiday Pay

   

The holiday year start date is of course the day after the end date.

• To confirm when the holiday year starts, go to HR > Administration > Global Settings > Edit Default Holiday Settings and select Holiday Year End

Applying this setting alone will turn on the additional holiday calculation over 12 weeks.

 

Override Additional Holiday Pay Start Year Date

When used, the Override Additional Holiday Pay Start Year Date will have to be updated yearly by the user on the date the Holiday Year begins to ensure that the system continues to calculate additional holiday pay each year

 

Include Current Period

An alternative to using the previous 12 weeks previous pay, is to use the current pay period’s payments along with previous pay periods when calculating how much to add to the basic holiday pay amount.

• Select Use Payments in the Current Pay Run in The Additional Holiday Pay Calculation

 

Selecting the 52-Week Calculation for Additional Holiday Pay 

The option to calculate additional holiday pay over 52 weeks changes either the 'standard setup' or 'include the current period' setup to use payments in a 52-week period in the calculation of additional holiday pay.

• Select Calculate Additional Holiday Pay Over 52 weeks

This setting must be applied with either the 'standard setup' or the ‘include current period’ setup.

 

Additional Holiday Pay Calculations

The calculation of Additional Holiday Pay is typically based on a ‘Relevant Period’, often the 12 weeks before the start of the pay period when the employee is on holiday (or 52 weeks, as per the setting mentioned above). It is calculated during the first 20 days of Statutory Leave within the holiday year and is paid in addition to basic holiday pay.

The Additional Holiday Pay for holidays booked in advance is calculated within the Pay period in which the holiday days are taken. 

The calculation method is broken into three parts:

1. Identification of 'Relevant Period'
2. Calculation of Average Weekly on Additional Holiday Pay elements (AWAHP) within the Relevant Period
3. Calculation of Additional Holiday Pay

1. Identifying Relevant Period 

This is usually the 12-week period in which the employee was paid before the start date of the Pay Period in which they were absent on holiday.

The end of the relevant period is the last day before the start of the pay period in which the employee was absent on holiday. The start of the relevant period is the first day of week one of the 12-week period preceding the end date.

For example: 

An employee is paid monthly (calendar month pay periods)

• They take 1 day’s holiday on July 15th
• The holiday falls in the pay period from 1-31st July
• The relevant period to calculate average earnings for Additional Holiday Pay is 7th April – 30th June (note actual dates may vary slightly in different years. 

Exceptions:

Retrospective Holidays - where a holiday day is entered into the system and authorised retrospectively, the relevant period used for the calculation is the 12-week period immediately preceding the pay period in which the holiday day fell

For example:

An employee is paid monthly (calendar month pay periods)

• They take 1 day’s holiday on June 26th but it wasn’t entered into the system until July 1st - after the June pay period had been calculated and paid
• The holiday fell in the pay period from 1-30th June
• The relevant period to calculate average earnings for Additional Holiday Pay is 8th March – 31st May (note actual dates may vary slightly in different years). 

Holidays Paid in Advance - where a holiday day is entered into the system, authorised and paid in advance manually by agreement, there will be no automated calculation for Advanced Holiday Pay

Where 12 weeks of data for the relevant period isn’t available in the system - the time period for the relevant period will identified as per the previous examples using only data that is available 

For example:

An employee is paid monthly (calendar month pay periods)

• They take 1 day’s holiday on July 15th
• The holiday falls in the pay period from 1-31st July
• The relevant period to calculate average earnings for Additional Holiday Pay is 7th April – 30th June (note actual dates may vary slightly in different years)
• The employee was a new starter on 1st June, therefore there are only 4 weeks of pay data
• The calculation (see point 2 below) uses only the number of weeks available. In this case, the sum of any earnings is divided by 4 instead of the standard 12.

2. Calculation of Average Weekly on Additional Holiday Pay elements (AWAHP) within the Relevant Period

AWAHP is the weekly average of all earnings for Payment Types flagged as Include in Holiday Pay and paid within the relevant period. The actual calculation varies depending on the pay frequency, as follows:

For a weekly payroll, it is:

• Divided by 12 (the number of weeks in the relevant period)

For a monthly payroll, it is:

• Divided by the number of months in the relevant period
  and then
• Multiplied by 12 (number of months in the year)
  and then
• Divided by 52 (number of weeks in the year)

For a fortnightly or 4-weekly payroll, it is:

• Divided by the number of whole weeks in the relevant period

Please note: where an employee has not received any payment for all Payment Types flagged as Include in Holiday Pay within the relevant period, the average value will be zero. In this case there will be no Additional Holiday Pay due to the employee.

 

3. Calculation of Additional Holiday Pay

The following table describes the calculation of Additional Holiday Pay for full-time, part-time, and flexible employment types.

Employment Type	Holiday Taken in Days	Holiday Taken in Hours	Notes
Full-Time / Part-Time	AHP = Holidays Days Booked  * (AWAHP ÷ FTE Days)	AHP = Holidays Days Booked   *  (AWAHP ÷ FTE Hours)	Depending on data available FTE Days and FTE Hours are taken in this order of precedence: 1. Employee Level Job Title ÷ Location Job Title If none present, it defaults to: FTE Days = 5 FTE Hours = Contracted Hours    if present, otherwise:   FTE Hours = 40
Flexible	AHP = Holiday Days Booked  *  (AWAHP ÷  Average Days)	N/A (holidays can be booked in Days, only)	Average Days (existing system functionality) are calculated and stored on a daily basis by the overnight service. Historical Average is stored per weekly basis.

 

Viewing Additional Holiday Pay

To see additional holiday pay that an employee has been paid in WFM payroll, follow these steps:

• Go to Payroll > Employees > Employee List > select the employee whose additional holiday pay you want to manage
• Go to Employee HR Info > Holidays > Additional Holiday Pay 

From here you can view the employee's accrued and paid additional holiday pay.

Fig.4 - Additional Holiday Pay against an individual employee

From here you can view the employee's accrued and paid additional holiday pay.

Aditional Holiday Pay is also displayed on employees' payslips as a separate payment.