How to handle holiday pay this summer

Almost every worker in the UK is guaranteed 5.6 weeks of annual leave. For regular full time workers
(5 days a week) that is 28 paid days off. However, it can get more complicated.

The 28 paid days off can include bank holidays. Usually there are 8 bank holidays a year, meaning full
time employees get 4 weeks of annual leave they use flexibly alongside 8 days off that everyone

Businesses are not legally required to give bank holidays, and many still operate on bank holidays
e.g. hospitality, tourism, retail etc. But if businesses do not, employees will still need to be given 5.6
weeks off.

Holiday entitlement is designed around traditional full time workers. Administering payroll for those
kinds of employees is straightforward as you pay them the exact same amount every month,
whether they have taken annual leave or not. You still need to calculate their entitlement for legal
reasons as for example if they leave your employment will need to calculate whether they have
taken more or less than their holiday entitlement.

Not all workers work 40 hours a week. Part time, shift and casual workers are all also entitled to paid
time off. But working out exactly want they should be paid is more complex and has recently
changed due to a court ruling that says part time workers on permanent contracts are entitled to a
full 5.6 weeks of leave (however, this may change again as the government is consulting on a
response to that case).

If the part time worker works the same hours every week, and works every week, they are paid their
normal weekly pay for the week they are off. But if their hours change dramatically the “52 week
averaging” process is used to work out the exact rate of pay, where the last 52 weeks that they were
paid is used to calculate what they should earn on holidays.

Crucially, this takes in the last 52 weeks they were paid, but can actually go back as far as 104 weeks
to cover those weeks in which they were not paid every week. If the worker has not been employed
for a full 52 weeks then the employer should look at how many full weeks you have been employed
for and work out the average.

This is a complicated process and errors frequently occur. For example, many people consider the
week to be Monday to Sunday. However, in the case of the “52 week averaging” process the week is

Sunday to Saturday and it needs to be done fresh every time an employee wants to take leave as it’s
a rolling 52 weeks.

For more information have a look here

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