Calculating your employee’s annual leave entitlement can be tricky for a growing business, especially if you have a mix of employees working full-time and part-time or working irregular hours. 

Most UK workers are entitled to a statutory minimum of 5.6 weeks annual leave per year (the equivalent of 28 days). You can decide in your own business whether or not this includes bank holidays and you can also choose to offer additional contractual annual leave entitlement above this statutory entitlement as a benefit. 

You can also decide when your holiday year runs to and from. Some employers opt for a January – December holiday calendar, others opt for a holiday calendar that falls in line with their financial year start and end and some employers will use the employees individual start date as the beginning of the holiday year meaning that each employee has a different holiday calendar (although this can be a little more challenging to juggle as your business grows). It’s really up to you and you need to decide what will work best in your business. Remember that unless you are using individual start dates to dictate the holiday calendar year, when an employee starts work with you part way through the holiday year, you need to calculate their annual leave on a pro-rata basis.  

For full time employees the calculation is simple, but things can get a little more complicated when it comes to calculating holiday entitlement for your part-time workers. Part time workers receive a pro-rata holiday entitlement which is based on how many days they are working per week. As an example, a full-time employee would receive 28 days annual leave and an employee working 3 days per week would receive 16.8 days per year. If you have to round up annual leave, remember to do this to the nearest full or half day but don’t be tempted to round down or your employees may end up with less holiday than their statutory entitlement.  

The other complication with part time employees is how to deal with Bank Holidays. An employee who works Wednesdays and Thursdays is not likely to be affected by bank holidays and this means that these employees could be receiving fewer annual leave days than their colleagues if you provide paid bank holidays on top of the 28-day statutory entitlement. If you do have a policy that provides bank holidays on top of the statutory entitlement you can give part-time workers a pro-rata bank holiday allowance to address this.  

Another challenge businesses face is if they have individuals working a diverse range of hours. In these cases calculating annual leave in days may not work for your business and so you may have to calculate annual leave in hours instead. 

Finally, make sure you have a policy in place which clearly sets out the rules in relation to annual leave entitlement and accrual and always remember to keep records of all annual leave requested and holiday taken by employees, ideally using HR Software so you can ensure that you have everything stored centrally.   

If you need any help with calculating annual leave in your business contact us today.