WFM UK: HR: Holiday Allowance and Pay Calculations for Flexible Employment Status

Overview

This article explains how Holiday allowance and Holiday pay is calculated for hourly paid employees with an Employment Status of ‘Flexible’.

The Employment Status is set in the Employment Details page of the employee record.

• Go to HR > Employees > Employee List > search for and select employee
• From the Employee Summary, go to Employee Info > Employment Details
• See setting for Employment Status

Fig.1 - Employment Status

Calculating Holiday Entitlement

All employees are entitled to be paid Holiday of 5.6* weeks a year. If an employee works 5 days a week, this equates to 28 days Holiday.

To work out the number of days a flexible employee is entitled to, the average number of days worked for the employee needs to be calculated.

The allowance is then calculated as below:
 

The average number of days is calculated by the system, based on the past 52 weeks worked.

This can be found in the employee's Holiday record in the HR module.
 

• Go to HR > Employees > Employee List > search for and select employee
• From the Employee Summary, go to Employee HR Info > Holidays

In the example below (see Fig.2), the employee has worked an average of 4.97 days over the last 52 weeks:

Fig.2 - Average days worked per week
 

• Any Holiday taken in this time will  be counted in the average days calculation as a working day
• Any days sickness may not be included in the average days calculation. This depends on the system configuration
• To configure including absence days in the calculation please refer to Release Note: Include Absence Days in Flexible Holiday Calculation

*5.6 weeks holiday is the statutory entitlement for the UK and includes Bank Holidays. This may vary for countries outside of the UK.

Important

Every hourly paid employee’s Holiday allowance will fluctuate as the average number of days worked per week changes. This calculation is updated every time a Rota is submitted to Payroll, i.e. at the end of the week.

It is therefore recommended that this is taken into consideration when requesting and authorising Holiday, especially in the first half of the Holiday year.

Long Service Increments

Increments may also be set up by job title and therefore the annual entitlement calculation would no longer be 5.6 weeks.

E.g. For an employee with 2 years’ service who is entitled to an extra day’s Holiday per year, the increment would be set up as 5.8 weeks.

Bank Holidays

For employees who do not work bank holidays, the average number of days is multiplied by 4 rather than 5.6

For example, if an employee works an average of 5 days a week and does not work bank holidays:
 

Holiday Pay

Holiday Pay is calculated based on an employee's earnings over 52 weeks.

The system calculates a daily rate based on the Average Summary Rate. 
  
The Average Summary Rate:
 

For example, if the employee worked 48 hours every week for 52 weeks, the daily rate would be £85.54.
 

 
The Daily rate is the Average Summary Rate x Hourly Rate:
 

Back Pay for Additional Holiday Pay

A Global Setting is available to include any additional payments that are in the current pay run within the additional Holiday pay calculation.
 

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

• Select Holiday Calculations

• Under the Additional Holiday Pay section, the setting is titled Use payments within the current pay run within additional holiday pay calculation

Fig.3 - Use Payments in Current Pay Run Option

By turning the setting on, any additional payments that are in the current pay run within the additional Holiday pay calculation are included.


Querying Holiday Pay

If an employee is querying their holiday pay, the first check should be the number of hours that employee has worked in the last 52 weeks.

This can be viewed in the employee’s holiday record by selecting the ? icon, as shown in Fig.3.
 

Fig.4 – The ? icon against Avg Hours/Week


Fig.5 - Hours worked in the last 52 weeks

In this example, the employee has worked fewer hours in two particular weeks, reducing the amount of pay they received and the number of days they worked. This has reduced their daily rate.

Possible Reasons for Reduced Hours

• Absence Days - Any SSP will be included in the employee's earning calculation. However, the daily rate will be reduced
• Hours not entered correctly on the rota - Any hours not entered on the rota will not be included in the holiday pay calculation. If they have been missed and entered in the Payroll module, the payment type should be configured to include these hours as additional holiday pay

Also See

WFM - Flexible Holiday Articles