The topic of holiday entitlement is an extensive and intricate subject that needs to accommodate many diverse needs and can be managed in various ways within the system. This article will discuss the 5 commonly used types of holiday entitlement.
There are five types of ways to calculate holidays if the holiday hasn’t been disabled:
- Pay holiday as a percentage of hours in wage sheets
- Earn holiday based on hours worked and claim with a holiday request
- Earn holiday based on pro-rata entitlement and claim with a holiday request
- Fixed yearly entitlement - (prorated based on contract start/end dates)
- Yearly entitlement based on previous weeks of work
The diagram below illustrates your options and what factors might make certain entitlement types more appropriate for your company's needs.
The rest of the article will go into detail about each of the options for holiday entitlement.
Disabled holiday
The first option you have is to disable holiday entitlement for that contract entirely. This stops staff from having any form of paid time off, but they will still be able to request unpaid time off.
This option might be used if you use another system to manage holidays. Before disabling holiday pay, it is important to know government guidelines on holiday entitlement.
Pay holiday as a percentage of hours in wage sheets
This is also known as holiday roll-up. This means that as the staff get paid for hours worked, they also get paid a percentage of their hours for holiday pay.
They will be able to request time off, but this will not use any holiday entitlement. Instead, holiday pay will be accumulated by the hours worked at the rate set by your company. For example, a common option would be 12.7% of hours worked calculated at the 'Holiday Rate'.
This type of holiday can be useful for irregular-hours workers and part-year workers, as it allows them to 'accrue' (build-up) holidays.
What is earn & claim?
Earn and Claim holiday entitlement means that staff must work a certain number of hours to receive holiday pay rather than instantly having access to all their annual leave.
There are two different ways to approach Earning and Claiming entitlement, which we will explain further. These are Earning based on Hours Worked OR Earnings based on pro-rata entitlement.
This article will then discuss how to set up an entitlement for staff using an Earning based on Hours Worked entitlement.
Earn based on hours worked
The first option we will go through is how staff can earn a holiday based on hours worked and then claim that holiday with a Holiday Request. This is not a fixed entitlement, and staff can earn more holiday the more they work.
With this option, staff work hours to earn a holiday allowance, which they can request to be taken off. They will then be paid for their days off using their entitlement.
To use this, go to Pay > Contracts > Manage Contracts to find your holiday options.
For a step-by-step guide to this holiday entitlement, visit our article on earning based on hours worked.
Earn holiday based on pro-rata entitlement and claim with a holiday request
The second Earn & Claim option has a fixed entitlement. Like the previous option, it requires staff to have worked a certain number of hours to generate their entitlement. However, with this option, staff can only earn holidays for a specific number of hours.
They will earn holidays based on their worked hours, and the system will provide them with a holiday allowance based on the percentage of hours worked.
For a step-by-step guide to this holiday entitlement, visit our article on setting up holiday with a pro-rata entitlement.
To learn more about earning and claiming holiday entitlement, you can also visit our video guide here.
What is Fixed Entitlement?
Fixed holiday entitlement is used when staff are given a fixed amount of holiday, such as 28 days or 224 hours for the annual year.
This entitlement is given annually. However, there are two different approaches to this type of entitlement.
These are - Fixed Yearly Entitlement (using contract start and end dates) OR Fixed Entitlement (Based on Weeks Worked).
Fixed yearly entitlement - (prorated based on contract start/end dates)
This option is where the staff have a fixed yearly entitlement for the holiday year. This type of entitlement is used when there is a fixed yearly holiday allowance, meaning that staff members can request a holiday immediately from their contract start date. If someone joins part-way through a holiday year, the amount will be pro rata down to this, reducing their allowance automatically.
Calculation methods
There are three options to calculate the entitlement for this allowance.
Simple mode
The first is 'Simple mode' (we recommend), which is used for anyone with a working pattern set up. This mode allows staff to book either a full day or a half day off work when booking a holiday.
Under this option, you can also set whether this should be recorded in hours or days.
In this setup, we can also select the maximum number of days to be deducted per week, which works well for both permanent staff and those on an ad hoc shift pattern.
Complex mode
The second is the 'Complex' mode. This option will use shifts to calculate holiday usage carefully down to the minute. You can use this option if you're tracking shifts and time entries. It’s a more detailed calculation based on shifts worked, allowing holidays to be taken in as little as one-hour blocks. It will use the shifts already scheduled in the system to determine what days or hours should be considered when deducting holiday entitlement.
Fixed pay mode
The last choice is fixed pay mode, which is for anyone who has shifts and is able to have them. This allows staff to book either a full day or a half day off work. The number of shifts allowed to be taken can be recorded.
For a step-by-step guide to this holiday entitlement, visit our article on setting up holiday for a fixed yearly entitlement.
Yearly entitlement based on previous weeks of work
The last option is where the staff member has a yearly entitlement, which is paid based on the previous weeks of work.
For this option, you would need to choose the number of days of entitlement that the staff is owed. Then, you select the period of time* from which the holiday pay average is calculated.
*52 weeks is the standard number of weeks in the working year.
For a step-by-step guide to this holiday entitlement, visit our article on setting up yearly entitlement based on previous weeks of work.
To learn more about fixed holiday entitlement, you can also visit our video guide here.
This article has provided an overview of the main types of holiday entitlement within the system. If you have more questions about holiday calculations, visit our article explaining how holiday calculations are made here, or get in touch with the support team for any further questions.
Comments
0 comments
Please sign in to leave a comment.