Company Holiday Schemes

Description

Use this page to add, update and delete company holiday scheme information.

Usage

This screen allows the entry and maintenance of holiday schemes within a company. The page defines not only the holiday scheme details, but also the payment elements that make up the holiday pay. Holiday schemes are selectable at employee level (see Employee Holiday Schemes).

Creating a Scheme

Enter the holiday scheme details and press Save. Note that you cannot enter accruable pay elements until a holiday scheme has been saved. The fields available will be different determined by the Scheme Type.

The generic fields available for entry are:

Scheme Name: Short name of the scheme (will appear in drop down menus).
Description: Scheme description.
Scheme Type: The types of holiday scheme are as follows and are described in more detail below. Periodic (this encompasses the scheme types weekly, two-weekly, 4 weekly and monthly), Hourly or Daily which are very similar to each other. Holiday Top Up and Holiday Top up V2 which are not accrual schemes and are usually used for permanent members of staff that have a fixed work patterns and Pay Immediately where workers that are paid through timesheets have their holiday paid in the same period as the timesheets. Once a worker is added to the scheme the scheme type cannot be changed.
Holiday Pay Element: Payment element that an employee is paid against when on holiday. Please be aware that once a worker is added to the scheme it cannot be changed. A new scheme would need to be created.
Holiday Year Start Date: Date that specifies when holiday year starts. The holiday scheme resets once the pay period start date is on or passes this date. This field can be left empty in order that holiday balances never get cleared down (unless Use Employee Effective Date is ticked).
Allow Negative Holidays: Yes/No option that defines if employees on the scheme are allowed to take more holiday than accrued. (N/A to Pay Immediately schemes)
Use Employee Effective Date: Ticking this box signifies that the effective date from the employee holiday scheme is used to determine the anniversary of the holiday year where balances are reset. Ticking this will disable the Holiday Year Start Date fields.(N/A to Pay Immediately schemes)
Pay Holiday On Leave: If ticked, employee's will be paid any accrued holiday not taken in the period they leave. (N/A to Pay Immediately and Top Up schemes)
Take Holiday To 4dp.: This calculates the employee's holiday to 4dp. rather than to 2dp. Once selected, this field cannot be unselected.(N/A to Pay Immediately and Top Up schemes)
Northern Ireland Reference Period. The current reference period to calculate the average rate of pay for an irregularly paid worker is 52 weeks, in the case of Northern Ireland this will instead be 12 weeks. (N/A to Pay Immediately and Top Up schemes)

Creating a Periodic Based Scheme

Days Accrued Per Period: The number of days accrued per one pay period.
Report in Weeks: Because many agency workers have no fixed work pattern their preference is to claim holiday in weeks. Ticking this will both show the worker’s holiday in weeks through their payslip and allow them to claim their holiday in weeks through the InTime application. It should be noted if that if holiday is added directly into InPay through the absence screen or importer, days must be used.

The periodic scheme will accrue a period's worth of leave if any of the elements selected to be considered in the calculation have ANY pay against them in the period. This will be the same whether the pay is 1p or £1000.00. If Out Of Step timesheets is enabled and the employee has a mistimed payment in another period as well as the current period the worker will accrue twice the amount

If the worker is on holiday in the same week as the leave is accrued the system will only accrue a portion of that leave. So for example if a worker takes 2 days holiday in a week that they also work, the system will accrue 3/5ths of the value. If Accrue when worker is on holiday is ticked the system will accrue the full periodic amount.

Creating an Hours Based Scheme

Hours Accrued Per Hour: The fraction of an hour to accrue for every hour worked.
Report In Units - Show as units rather than hours on the payslip and reports

Once the data has been populated, press Save to commit to the database. Once saved, accruable pay elements can be set up.

Creating a Daily Scheme

The scheme is almost identical to the hourly scheme. The difference being that the timesheet units received should be in days and the value to accrue should also be entered in days.

Creating a Pay Immediately Scheme

A pay holiday immediately scheme will pay the employees the holiday percentage from their timesheet (if available) where the element is holidayable. If the timesheet line does not have a rate against it, the Units Accrued Per Period will be used.

Employees on the scheme will not be able to take absence through the normal absence entry screen (e.g. to claim holiday).

Creating a Top Up Holiday Scheme

Top up schemes have been created for workers that have an Annual Entitlement of leave and would have previously been paid at their normal rate (with the payslip not necessarily even identifying the worker as being on leave).

Recent legislation has led to there being a requirement to pay the equivalent additional pay (for example overtime and commission) that the worker would have earned had they not been on holiday. This is based on a 52 week average of the elements selected against the scheme (so for example Basic Pay would not be selected).

There are 2 Holiday Top up schemes, Holiday Top Up and Holiday Top Up V2 which differ in how the 52 week reference period is calculated

Adding Accruable Pay Elements

Adding pay elements to accruable pay: Select the Pay Element from the pay elements drop-down and click the + symbol. The pay elements will be added to the list of accruable pay elements.

Removing pay elements from accruable pay: Select the pay element from the scheme elements grid, and click the bin icon. The pay element will be removed from the list of scheme elements.

The elements will be used to calculate the average rate and in the case of accrual schemes, whether a value is accrued for a period.

Deleting a Scheme

A scheme can only be deleted up to the point a worker is added against it.

52 Week Calculation

Hourly and Daily Scheme

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)

Periodic Scheme

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)

The key point to recognise with both the above schemes is that only periods where the worker has pay against a holidayable component are included in the calculation. Therefore the reference period to retrieve pay may stretch back further than 52 weeks and could be as long as the 104 week maximum allowed.

If the worker does not have 52 weeks of holidayable pay within the 104 weeks then in the case of the periodic scheme the reference period is the number of weeks where there is pay.

Pay Immediately scheme

N/A

Top Up Scheme

The original Top Up scheme was based on picking the additional elements that make up the worker's pay. However unlike the other schemes the reference period counted the period as included if the worker had any Pay not just the holidayable elements. Periods were only excluded if the worker had 0 pay. If a worker didn't have enough periods of pay due to either having long periods without pay or being a relatively new starter, the number of periods in the reference period would be reduced

Average Rate – A monthly paid worker joins the company in January, is paid every period and receives £3000 commission in June and takes holiday in October. the calculation is

3000 (pay) / ((4.333 * 9) * 37.5 (contractual hours)) = 2.05 for every hour of holiday taken

Top Up Scheme V2

The V2 scheme is based on the legislation changes that came into effect April 2024. The premise of picking the element and the division by the contracted hours is the same. However the calculation cycles back from the last pay date to attempt to retrieve 52 weeks that the worker has been employed. However any week where there is a day of statutory absence is excluded from the count, meaning the calculation cycles back another week. The calculation will also not count the week if there is a full working week of unpaid leave. It is worth noting however that if some holidayable elements are earnt in these excluded weeks they will be included in the calculation. The calculation has to also take into account full periods, so for example if the worker is paid monthly the calculation would cycle back to the end of the month that is is in.

Average Rate. A worker has had 2 days of sick in 2 separate weeks and has receive £3000 commission over the past 13 month

3000 (pay over 13 months) / (54 weeks * 37.5 hours) = £1.48 per hour

If you need any assistance with Holiday Legislation RSM have a specialist team who can assist. Please get in touch with your normal RSM contact who can provide further info