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Additional Holiday Pay : Fourth Calculation Queries

Oliver

Hi Guys,

I've had Amanda Toohey from Bluestone raise this to Support but I think it's more for Help Centre / Solutions, I advised her to create a post but she is having some difficulties. Can someone clarify on the below queries?

The business needs to comply with HMRC and ACAS guidance on paying holiday pay correctly, in particular ensuring that employees get paid overtime, commission and bonuses when they are on holiday. We have read your recent release summary and have the following queries to resolve before we are comfortable switching to the ‘Additional Holiday Pay Calculation’.

https://help.hotschedules.com/hc/en-us/articles/360050444112-Q3-2020-Release-Summary

1. How does Fourth deal with hourly paid employees working over their contracted hours on the rota? E.g an employee is on a 40 hour contract (8 hours per day) but on average works 42 hours per week for the previous 52 weeks. Will this holiday pay calculation include the holiday pay for those extra 2 hours per week? If not here, then how can we calculate this to ensure they get the additional holiday pay for additional worked rota’d hours?


2. HMRC states that the 52-week holiday pay reference period must only include weeks for which the worker was actually paid. How does Fourth handle these exceptions such as long term sick, unpaid parental leave or SMP? HMRC states that you have to extend the holiday pay reference period in cases such as these


3. Rolling 52 weeks: Default option for Fourth is to look at the previous 52 weeks prior to the current pay period so a snapshot each month. Does this agree with the HMRC definition for the holiday pay reference period? HMRC states that “the holiday pay reference period starts from the last whole week ending on or before the first day of the period of leave”. In our view, there is a discrepancy here


4. Also, Fourth allows you to ‘include current period’ for the 52 week selection. However – Does this mean the whole current period or just dates leading up to the holiday date as per HMRC guidance?


5. For casual workers with no normal hours, including workers on a zero-hours contract, the holiday pay they receive will be their average pay over the previous 52 weeks worked. Can you confirm that is how Fourth calculates?

See below for more detail on HMRC guidance:

https://www.gov.uk/government/publications/calculating-holiday-pay-for-workers-without-fixed-hours-or-pay/calculating-holiday-pay-for-workers-without-fixed-hours-or-pay--2

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Comments

1 comment

Date Votes
  • Alison Barlow

    Hi Oliver

    I'm not entirely sure which calculations are being questioned as we have 2 within People System which refer to the 52 weeks. 

    • The calculation of statutory holiday pay over 52 weeks was released an in place in April 2020.  The release notes can be found:

    https://help.hotschedules.com/hc/en-us/articles/360043241851-WFM-Release-Note-52-Week-Holiday-Calculation

    • The calculation for 'Additional Holiday Pay over 52 weeks was released quite recently.  The release notes can be found:

    https://help.hotschedules.com/hc/en-us/articles/360046606232

    Hopefully the detail below will answer the queries

    1. If hourly employees work over their contracted hours, the hours will be recorded within the schedules.  These are automatically included in the flexible holiday calculation so don't need to be addressed separately in terms of the Additional Holiday Pay functionality. 
    2. The 52 week holiday calculation will exclude any weeks where an employee is not paid, due to parental leave, sickness etc.  It uses full weeks in it's calculation
    3. If this query is in regards to the standard flexible holiday calculation, there is a calculation that runs every day according to the data submitted within the rota.  If it's in regards to the additional holiday pay calculations, the standard option will look at the weeks prior to the current pay period.  It is possible to include the current pay period which will look at the weeks within the current pay period for the specific payments flagged and includes this in the additional holiday pay amount.
    4. The 'include current period' is only for the additional holiday pay calculation.  it will look for any flagged payments in the current period.
    5. There are two settings within Fourth for hourly rate employees - Flexible and Casual.  All Employees flagged as Flexible will have the 52 week average calculation.  All Employees flagged as Casual will have a different calculation which bases the holiday on 12.07% of every hour worked (We are anticipating that this holiday calculation will be removed officially removed from legislation in the coming years, however HMRC have not yet announced this).

    Hopefully this has answered all queries.

    Kind Regards

    Alison Barlow

     

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