Holiday Pay

Staff are entitled to at least four weeks paid leave, however should overtime also be included?

Minimums
All workers are entitled to four weeks paid leave, this also includes the eight statutory days, though this may change. One week is the workers normal working week, so if the worker was working 2 days a week then they’d be entitled to 8 days holiday per year at minimum.

Calculations
To calculate what a days pay is you must divide the annual salary by the number of working days in a year (a normal 5-day working week means 261 working days a year). So if John is working 5 days a week and his annual salary is £20,000 then his day’s pay is £76.63 (20,000/251).

Pay Varies
If the pay is variable then you must take an average of the employee’s pay over the preceding twelve weeks. So what were to happen if your employee undertook a lot of overtime before his holiday?

Providing the overtime isn’t guaranteed then the holiday pay will only include the contract hours.

Advice,
When it is time to review the contracts make sure to look at the wording of any overtime clause. If it’s clear that overtime isn’t guaranteed then you can base holiday pay solely on basic working hours.