4. Accruing Holiday and Calculating Average Rate

Once the employee has been added to the holiday scheme they will start to accrue holiday for every period they work (based on having pay against one or more of the pay elements selected). The amount they accrue and their average rate is calculated as follows.

Hourly Scheme

Accrue - A worker will accrue a fraction of an hour for every hour worked against the pay elements that have been selected against the holiday scheme

- For example if the scheme just has the pay element Basic Pay selected to be included and the worker works 8 hours against Basic Pay and 5 hours against Overtime, holiday will only accrue on the 8 hours

8 * 0.1207 (accrual rate) = 57.93 minutes accrued

Average Rate – This is all the qualifying pay earned in the reference period divided by the number of hours.

- For example if an employee earns £5200 over a 52 week reference period and works 520 hours the hourly rate calculation would be

5200 (total pay) / 520 (number of hours) = £10 (average hourly rate)

Day Scheme

Accrue - If the employee has any pay against any of the pay elements selected they will accrue the full days accrued per period set at company level (or overridden on the worker) unless they take any holiday during the period, in which case the accrual will be reduced. For example if a worker is paid weekly and takes 2 days holiday in a week they will accrue 3/5 of their normal amount as long as they work.*

Average Rate –This is all the qualifying pay earned in the reference period divided by the reference period and the number of days per period, as specified by selecting the scheme type.

- For example if an employee earns £5200 over a 52 week reference period, the calculation of the daily rate will be

5200 (total pay) / 52 (number of reference periods) / 5 (days in period) = £20 (average daily rate)

*please see section 5 for further detail