This article explores the details of paid holiday. While most people know the basic idea, some aspects are rarely discussed. Our goal is to either inform or remind you of these points.
Holiday entitlement is a government regulation that requires employers to give their staff at least 28 days of paid leave. It is a simple idea everyone understands. However, because of different working conditions, payment differences, employment types, and other factors, the process isn’t always straightforward. Sometimes, companies spend too much money and resources trying to resolve their holiday policies when what they actually lack is basic understanding.
There is a simple solution to this, which we will explore in this blog post. Essentially, it all comes down to understanding the basics and then some more complex aspects. Both will be discussed below, along with suggestions for tools that could help you optimise these processes as well.
How to Calculate Holiday Entitlement?
Holiday entitlement calculations follow a straightforward formula. The number of days of paid annual leave is obtained by multiplying days worked per week by 5.6. For a more detailed approach, especially when dealing with temporary hourly workers, use accrued hours multiplied by the employee's hourly rate.
However, if you are based in the UK, there is an official calculator available. It covers both irregular hours and full-time employment, along with various other conditions such as the employee not working the full year. You can find it here.
The Basics
We won’t revisit defining minimal holiday entitlement as we have already discussed this topic before. However, we will explore some of the more detailed aspects that often raise questions and are sometimes viewed as controversial. Remember, these do not apply to every business.
Does Holiday Entitlement Cover Bank Holidays?
The short answer is yes. The full version is that it depends on the business. To keep it simple, many businesses remain operational during bank holidays. Typically, bank holidays are not counted as part of holiday entitlement. However, in companies where bank holidays might be especially profitable, such as the hospitality sector, they are included in holiday entitlement since staff must book these days off in advance.
This is a controversial topic as it suggests holiday entitlement varies by sector. We disagree. First, only the minimum holiday entitlement is set by law - there is no limit for companies willing to offer more paid time off. Businesses open on bank holidays can address this by giving their employees longer annual leave. Additionally, industries that remain operational or are busier during bank holidays may offer an alternative day off company-wide once the busy period ends. Ultimately, fairness in this matter depends on the employer, not the system.
Holiday Accruals and Carryovers
In theory, there is nothing difficult about accruals or carryovers. If your staff don’t claim all of their annual leave, it’s called a holiday accrual, which then carries over to the next year. As simple as this may sound, the practice isn’t always straightforward. Firstly, different companies usually have different carryover rules. For example, there may be a limited number of days a single employee can carry over from one calendar year to the next.
Accruals are even more complex because there are more conditions affecting them. These include the basis on which an individual employee is paid, such as their pay frequency (hourly rate vs salary), status (part-time vs full-time), and length of service (temporary vs permanent). All of these factors influence how the holiday is accrued. The process can become very complicated when a few special conditions come into play. To save yourself time and money, as well as to minimise potential errors in calculations, we strongly recommend using a holiday management tool that can handle these operations for you.
Things Worth Knowing
Having covered the basics, there are more detailed tips. They aren’t as vital, but are useful to know, especially if you’re aiming to better optimise your business in terms of holiday management and work distribution.
Enforcing Time Off
Not only can you compel your staff to take time off, but it’s a practice more companies should adopt. As long as there’s a process in place, this is a highly effective way to tackle the workaholism epidemic the world faces. An over-glorified view of productivity and consistently outstanding performance leads many workers to skip taking time off, which is the fastest route to eventual burnout. It is as damaging to your business as it is to them, affecting both their performance and the office culture.
As long as there is a clear process in place, that is. Just like when an employee requests annual leave, it should be enforced with a relevant notice. Usually, the recommended number of days is based on how many days off they are encouraged to take. It also shouldn’t be used as a way to punish workers, as it would then become a paid suspension, which is never good for morale. Instead, approach your workers with empathy and communicate that this is a way to help them maintain their wellbeing.
Remaining Mindful of Availability
While it’s important to maintain a healthy approach to holidays, you should also avoid sacrificing your company’s productivity. Specifically, you need to monitor your staff's availability before approving holiday requests to prevent being short-staffed, especially during busy periods. A centralised holiday management system is an ideal solution for this. Most platforms offer a calendar view several months in advance, displaying each worker’s availability.
Depending on the tool and whether you’re an approver or have someone else designated for the task, you may set up warnings when accepting someone’s holiday request on days when there are already a couple of workers off. It is also highly beneficial for companies utilising hourly workers or temporary staff to have a holiday management tool connected to their timesheet solution. Not only does it keep them in the loop regarding availability, which isn’t always consistent, but it also takes over tasks like holiday accrual calculations.
Get Better at Holiday Management
If it seems there are many things to cover to become truly efficient in holiday management, you’re right. But the good news is that there’s a way to do it quickly and with minimal effort. All you need is the right tool.
Introducing a Holiday Management Platform
The simplest way to gain the upper hand when managing holidays is to invest in a dedicated tool. We’ve already discussed the advantages of having a centralised view, but that’s just one of the benefits that holiday management software provides. Most platforms feature a variety of tools that assist with various holiday-related processes. Such as bookings, approvals, accrual calculations and many more.
Your employees are likely to be very receptive to it as well, as it is bound to simplify the process of booking time off. Instead of email threads that tend to get lost or forgotten, booking a holiday through the system is a much quicker and smoother process, involving only a couple of clicks. It is just as easy for the approvers, who can make their decision directly from their email once a request notification arrives. A centralised view also makes it easy to identify gaps and recurring patterns in attendance, making it easier to spot and address absenteeism before it becomes a problem.
Summary
There is more to paid holidays than we often realise when they are mentioned. While the concept of holiday entitlement is straightforward, some factors can raise questions. For instance, what kinds of time off are included under paid leave? Additionally, how do you calculate holiday entitlements and carryovers when dealing with different employment arrangements like zero-hour contracts or contractors? All these processes can be confusing and prone to human error, especially when there is a lack of understanding or experience.
Many companies also struggle to understand that time off can be enforced when employees don’t claim their holiday entitlement voluntarily. As long as there’s a clear procedure in place, it’s a routine business process you shouldn’t shy away from. While a healthy approach to granting holidays to your staff should be a priority, it shouldn’t negatively affect your team’s performance. All concerns regarding time off, compliance, and balance can be easily addressed with just one tool - a holiday management system.
If you want to try it before committing or have any questions, we are happy to assist you further.