A small business guide to holiday pay for employees

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A small business guide to holiday pay for employees
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Estelle Hardwick

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About Estelle Hardwick

Estelle is the Director of AMR, overseeing the Tonbridge, Tunbridge Wells and Chatham branches. She makes sure that AMR provides exceptional support to each and every client.

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Everyone needs the occasional break to recharge both physically and mentally and return with (hopefully) fresh purpose and enthusiasm for work.

However, calculating holiday pay can be an unnerving task for employers running small businesses, as UK legislation governing leave entitlement is not always easy to decipher without HR staff to investigate the complexities. Post-pandemic, working habits are considerably more diverse and vary from full-time to every possible combination of part-time, so there’s no one-size-fits-all solution.

By law, almost all workers are entitled to at least 28 days, or 5.6 weeks, of paid annual holiday, which is known as statutory leave entitlement or annual leave. This includes agency workers, workers on zero-hours contracts and workers who undertake irregular hours. All workers should have their holiday entitlement set out in their employment contract when they start at a company, and the accrual of leave begins immediately, even during an initial probation period.

Workers are entitled to a week’s pay for each week of statutory leave that they take. However, some businesses offer further days for longer-serving employees, sometimes on a sliding scale depending on length of service, and an increasing number offer workers an extra day off on their birthday. Employees who join midway through a year will usually be entitled to holidays pro rata to the amount of time left in that year.

Small businesses often have a higher number of part-time workers and employees on irregular hours. Part-time workers are entitled to the same number of days as full-time, but this will also need to be calculated pro rata. Workers who have irregular hours are entitled to accrue leave by the hour. The government website has a useful tool to help with these specifics: Calculate holiday entitlement – GOV.UK (www.gov.uk).

An employee embarking on maternity, paternity or adoption leave is entitled to accrue holiday leave as though they were still working.

As a business owner, you’re entitled to control exactly when employees take their annual leave. For a seasonal business, for example, there may need to be a moratorium on particular times of year in order to maintain cover, and most businesses specify the number of staff that can take leave at the same time. If a half day’s leave is requested, the employer can decide the hours to be worked during the remaining half day.

With regard to booking holiday, most employers require notice of twice as long as the amount of leave requested plus one day. So if an employee wants to take a day off, they need to give at least three days’ notice.

It’s a lot to take on board, but at AMR Bookkeeping Solutions we work with numerous small businesses and have years of experience in helping with payroll issues. If the prospect of sorting out your team’s holiday calculations leaves you with an administrative quandary, why not call our friendly and professional team for advice and help? Contact us on 01892 559480 or check out our website.

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