holiday pay entitlement

If you have an employee who leaves part way through the year, they will be entitled to a payment in lieu of any accrued but untaken holiday. This will be based on the worker’s annual holiday entitlement, the proportion of your ‘leave year’ from it’s commencement until the day before the employee leaves and the amount of leave already taken.

A worker’s annual entitlement depends on the number of days worked per week, i.e. if five days are worked each week, they are entitled to 20 days holiday, if they work three day’s a week, they are entitled to 12 days holiday, etc.

Most employers have a clearly defined holiday year and this should be defined in the staff handbook, however, if you do not have a defined year, it starts on the date the employee commenced employment with you, and from the anniversary of that date in future years.

The formula to use to work out any remaining entitlement is:

Annual entitlement [days or months] x (number of days or months until termination date, divided by 365 or 12)

You then deduct the amount of days already taken and, whatever is remaining is the employees entitlement.

For more information regarding employer obligations, e.g. holiday rights, sickness rights, redundancy, etc, please feel free to contact our payroll department.