Calculating Holiday Entitlement

Leave or holiday allowances are regulated and managed in deferent ways from country to country. This document looks at some examples of how the number of days (or hours) awarded as a leave allowance vary in different regions.

United Kingdom

In the United Kingdom the statutory paid leave entitlement is 5.6 weeks a year. This is typically considered to be based on a five-day working week, which equates to twenty-eight days paid leave a year. Leave for part time workers can be calculated by taking the number of days worked and multiplying by 5.6. Someone working two days a week is entitled to 11.2 days leave for example. Twenty eight days is the upper limit of the entitlement, so someone working six days a week is only entitled to twenty eight days leave (not 33.6 days (5.6 x 6)).

Public holidays can be included as part of a workers leave entitlement, employers can require workers to attend on these days. For part time workers policies related to bank holidays can raise issues. A part time employer who work pattern includes a Friday or a Monday (where bank holidays mainly fall) could be forced to take these days as paid leave preventing them from taking these days at a time of their choosing. Part time worker whose work pattern does not cover Mondays or Fridays may have a free choice over how to use all their entitlement which may introduce disparity between individuals working the same number of hours but on different days. To manage employee relations policies relating to how bank holidays are to be accounted for should be considered carefully.

On the face of it for full time workers administering leave of twenty-eight days is a straightforward operation for an HR system or even using a paper-based system. Challenges can occur when calculating the fractional amounts for part time employees, especially where those workers do not work fixed hours. To achieve this it is important that a system is able to factor hours worked against a set of full time hours; the same is true when calculating the amount of leave to deduct per booking.

The length of a working day can also complicate matters when calculating leave for part time staff members. A part time worker contracted for six hours on a Wednesday and eight hours on a Thursday provides a common problem. If their leave was assigned and deducted in whole days then they receive more time off work if they book all their leave on a Thursday; since the company pays by the hour this effectively increases the total cost of their remuneration. An option here is for a system to calculated time lost and entitlements in hours. Alternatively, to allow calculations in day units FTE (full time equivalence) could be used; the longer day may then be counted as one day, the shorter day as three quarters of a day.

HR systems must be able to provide a range of options for configuring leave rules to account for UK working rules. This must allow for factoring by FTE and also allow the units used to be set as days or hours. Options for including or excluding public holidays should also be included, additionally workers may also be subject to different sets of public holidays depending on which part of the UK they are operating in. As the statutory entitlement is only a minimum value hr systems may also need to be provide additional functions such as allowing annual increments based on length of service.

Information on holiday entitlement in the UK can be found here: https://www.gov.uk/holiday-entitlement-rights

Below are a few examples of how statutory leave entitlements are calculated in other countries:

USA

In the USA there is no requirement for employee’s to be given any paid holiday. In practice employee’s there would normally expect to receive some entitlement anyway with the amount of the entitlement being linked to their length of service. Workers may also be awarded paid time off for public holidays at the employers discretion. Whilst there is no statutory requirement over three quarters employees do have some form of paid leave entitlement.

An HR system could use allowance bands to assign the correct amount of leave to employee’s based on their length of service. Useful functionality in this area is for the system to allow calculation based on leave or service year.

The U.S. Bureau of Labor Statistics website can be found here: https://www.bls.gov

The Netherlands

For the Dutch there is a statutory leave entitlement of four times the number of weekly working hours (with part timers receiving a proportional amount). In the Netherlands other factors may also come into play, trade unions are allowed to agree terms for a sector, which employers must work with.

As the statutory calculations are in hours an HR system must be able to work in this unit and factor employment by FTE (full time equivalence) . This allows for correct and automatic calculations of proportional entitlements for the work force. In the UK regulations such as TUPE (transfer of undertakings (protection of employment)) mean companies may end up with multiple sets of full time hours, in the Netherlands a company has a single set of fulltime hours which simplifies administration.

More information on Dutch employment practices can be found here: https://business.gov.nl

South Africa

The award of leave in South Africa can be calculated in two ways. You are entitled to twenty one days annual days. By agreements, you can alternatively take one day for every seventeen worked or one hour for every seventeen worked. In addition to this, staff are entitled to paid leave on public holidays, alternatively the employee must agree to work on the holiday and be paid double their standard rate or be awarded toil (time off in lieu).

This calculation does not consider working hours and manages issues relating to part time workers by stipulating continuous days. An HR system in this case should ignore FTE calculations and treat each leave day as a single unit; annual entitlements are set at a fixed amount. It is likely in practice that employers would offer more generous awards to employees so the ability to assign incremental increased based on length of service would be desirable.

The department of employment and labour in South Africa can be found here: http://www.labour.gov.za

Switzerland

The Swiss receive at least four weeks of annual leave. People under the age of twenty are entitled to an additional week. In addition to this public holidays are granted on top of annual leave, with a stipulation that the where a public holiday falls within a period of leave this should not be booked as holiday. Public holiday are not all federal so regional entitlements may vary. This entitlement establishes a minimum entitlement so actual awards may be higher.

An HR software system that handles this calculation will need to be able to factor by both the age of the employee and be able to identify dates, which fall on public holidays. As the public holidays are regional, a system will need some means of assigning the correct set of public holidays to the correct employees. The system will also need to be able to calculate a leave entitlement based on the age of the employment, rather than leave year or employment anniversary.

More information can be found on Swiss Authorities Online here: https://www.ch.ch/en/holidays-and-public-holidays

Additional Information