Holiday entitlement calculator (calculate leave for employees)

Those working part-time hours are still entitled to the part-time equivalent of 5.6 weeks of statutory leave entitlement (or more, as contracted).

Importantly, if you as an employer give more than the minimum holiday pay to full-time employees, you’ll have to give these benefits to part-time employees to avoid discrimination.

Part-time employees receive holiday entitlement on a prorated basis. This means that their statutory leave entitlement is proportionate to the hours they work.

To calculate this, you’ll need to know:

• Number of hours worked in the pay period
• Number of full-time hours.

The formula is:

Number of hours worked per week / full-time hours per week x contracted days entitlement x full-time hours per day = hours of holiday entitlement

Example, for an employee working 25 hours per week:

25 / 37.5 x 28 x 7.5 = 140 hours of holiday entitlement

Note, a typical full-time employee works 37.5 hours per week, 7.5 hours per day, 5 days per week.

For seasonal workers, temporary workers, or those who work irregular hours, calculating their holiday entitlement used to be complicated.

The Working Time Regulations 1998 were amended by reforms effective January 2024, introducing new rules on holiday entitlement and pay for irregular‑hours and part‑year workers

These workers now accrue statutory holiday entitlement using an accrual method

For an employee who works only part of the year, or works irregular hours, their holiday entitlement is calculated at 12.07% of the hours they worked in the pay period. 12.07% is based on the statutory minimum holiday entitlement of 5.6 weeks.

For example, if they worked 25 hours and are paid weekly:

25 × 12.07 ÷ 100 = 3.02 or 3 days

For example, if a zero-hours employee works for 25 hours in June, they will receive 25 x 12.07%= 3.02 hours, rounded to 3 hours of holiday leave entitlement.

This will accrue until they want to take a holiday, or if they leave.

From 1 January 2024, rolled-up holiday pay is permitted again for irregular hours and part-year workers, provided it is clearly stated in their contract and shown separately on their pay slip.

For all “regular” employees, holiday entitlement is accrued over the period the employee works.

Because full‑time workers (five‑day week) are entitled to a minimum of 28 days of statutory annual leave, which may include public and bank holidays depending on the contract, you can calculate accrual at the end of each month worked.

For part-time employees, calculate this on a pro-rata basis.

To calculate, use the following formula:

(Holiday entitlement divided by months in the year) x months worked so far

An important note is that many employment contracts are for 20 days entitlement, plus public holidays this means that only 20 days accrue and not the public holidays.

Public holidays are dependent on what is outlined in an employment contract as they are not automatically paid, and there is no statutory right to paid public holidays.

For example, a full-time worker (who works 5 days per week) will accrue five days of holiday after three months: (20 days/12 months) x 3 months worked = 5 days.

Since statutory holiday entitlement exists from the first day of employment, there’s no minimum waiting period.

For employees who have taken more holiday than they have accrued at that point in the year, this will be made up later in the year.

And if an employee leaves, you can claim any overpaid entitlement days back in their final payslip.

How to calculate holiday entitlement when an employee leaves?

If an employee leaves before they have taken all their paid holiday entitlement, they may be owed payment in lieu of any holiday days they have accrued but not taken.

For example, an employee’s annual holiday year commences on 1 January, and they are on a salary of £52,000.

They work for four months without taking any holiday and then leave at the end of April.

Their contracted holiday entitlement is 20 days per year, plus public holidays.

Calculate the holiday days accrued:

Days of contracted holiday entitlement per year divided by 12 months of the year x number of months worked so far

(20 / 12) x 4 = 6.7 days accrued (rounded up to 7 days).

What if an employee doesn’t take their statutory holiday entitlement? (days in lieu)

If an employee doesn’t take their full 28 days of statutory holiday entitlement, there are a couple of different possible outcomes.

Use it or lose it

The first is if you operate on a “use it or lose it” policy, which means that employees must forfeit the pay and days that they don’t take.

Under these policies, you must show that you have actively encouraged your staff to take their statutory holidays.

There are risks for the employer if staff are unable to take their holidays either due to illness, lack of encouragement or a high workload.

This means that a written policy is not enough.

You must be able to demonstrate that you have actively encouraged staff to take their holiday entitlement and that you have reiterated the deadline, either by way of email or by using notes on payslips.

Payment in lieu

Those employers who don’t operate a ‘use it or lose it’ policy will most likely carry over their holiday entitlement.

An employer can allow the carry-over of up to 1.6 weeks of leave into the next leave year, and more if contractually agreed.

Up to 4 weeks of statutory leave may be carried over if an employee was prevented from taking leave due to reasons such as long-term sickness.

For employees entitled to an enhanced leave policy, it’s up to the employer to determine how many extra days may be carried over.

For employees that have more than the statutory 28 days, they could be paid in lieu of any of those additional days to the statutory 28 that they don’t take as holiday.

It can. Many contracts include UK bank holidays within the 28‑day allowance, while others offer 20 days plus bank/public holidays.

Check the employment contract to confirm what applies.

At the company’s discretion, some workers may be entitled to enhanced holiday entitlement, where they are offered, for example, 25 days of holiday plus public holidays, which is a total of 33 days.

In contrast to the statutory holiday entitlement of 28 days, a report found that in 2023 the average employee in the UK took 33.9 days of annual leave.

 This demonstrates a decline from 36.7 days in 2022, and 38 days in 2020.

It’s uncertain as to why this decline might be happening.

Possible explanations include people being too busy or not being able to afford to take holidays abroad.

As a comparison, in the rest of the world, Iran has the most statutory days of holiday at 53 days. Andorra has 45 days and Malta 41.

The UK is a long way down the list for days of holiday entitlement compared to other countries.

But at the bottom, Nigeria has only five days and the US does not offer any statutory holiday and holiday entitlement is at the employer’s discretion.

What happens if an employee leaves part way through a holiday?

An employee only gets holiday pay for days accrued of entitlement and not for all the days of their holiday.

As an example, an employee hasn’t taken any other holidays in a year, then decides to leave.

Just before they leave, they decide to also take a two-week holiday.

However, their final day of employment falls on day four of their holiday.

This means that they have only taken four days of their holiday entitlement and not two weeks.

Their final entitlement should be calculated based on the actual number of days holiday taken whilst employed, which in this case would be four days.

Note: as an employer, you are entitled to reclaim days of holiday from an employee if they have taken more days of holiday than they are entitled to.

You may do this automatically by deducting the amount from their final salary, but this must be shown in the payslip.

If employees go on long-term sick leave, they are eligible to carry over 20 days of their statutory entitlement once they return to work.

Those who have been prevented from taking their holiday due to maternity or paternity leave, are eligible to carry over a full year’s statutory holiday entitlement into the next annual leave year.

Holiday pay should be calculated at the same rate as an employee’s normal compensation, on either a daily or hourly basis.

However, following a ruling in a court case, there are a number of situations where payments above basic pay are required to be included in holiday pay:

• Workers who have a contract that includes a set commission are entitled to have their commission included in any holiday pay calculation.
• Workers who receive extra pay according to their professional status, length of tenure, or qualifications, also receive the extra payment in their holiday pay.
• Where employees have regularly worked overtime within the past year, they are entitled to include those hours in their holiday entitlement calculation.

Monthly salary calculations require you to calculate the daily pay rate of the employee.

1. Annual salary divided by 52 = weekly pay
2. Weekly pay divided by number of days in a workweek = daily pay
3. Daily pay times by number of days holiday entitlement = holiday pay

A member of staff earns £52,000 per annum and works five days per week.

1. £52,000 / 52 = £1,000
2. £1,000 / 5 = £200
3. £200 x 12 = £2,400

Their daily rate is £200. If they have 12 days of holiday untaken, that will equate to £2,400 holiday pay owing at the time of leaving.

Final thoughts

Holiday entitlement and holiday pay are essential aspects of payroll and HR, yet they can be surprisingly complex.

By using the holiday entitlement calculator and following the guidance outlined, employers can help ensure compliance and fairness for their teams.

However, as employment law and payroll regulations can change, it’s important to stay up to date and seek professional advice when needed.

This article is not exhaustive and can only be used as a guide.Please check with your HR director/consultant or with a qualified accountant.

Getting holiday pay right supports both your business and your employees. It helps to build trust and helps staff take the holiday that they’re entitled to.

Sage Payroll enables you to auto sync your payroll data to accounting, keeping payslips up to date even when holiday entitlement is taken and holiday pay is required to be added.

Editor’s note: This article has been reviewed and verified by a CIMA accountant.