Calculating the daily rate for annual leave

Calculating the daily rate for annual leave

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I am in correspondence with my late husband's employer over the payment of untaken annual leave accrued at the date of his death. He was in salaried employment paid monthly in arrears. I have done some research and have found an Employment Appeal Tribunal case from 2002 (Leisure Leagues UK Limited -v- Maconachie) which indicates that the annual salary should be divided by the number of working days in the year and not by the number of calendar days. This is certainly the method I have always used but the employer is using a slight variation on the calendar days method. I appreciate you are accountants and not lawyers but I assume many of you provide a payroll service. What method do you use?
Candace Orr

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By flurrymc
27th Oct 2004 11:07

Case law
IACR Rothamsted v Mr R.M.Jenkins - following on from the Thames Water v Reynolds case states that, in the absence of any other contractural term, the denominator and numerator of the fraction should be based on calender days, not working days.

http://www.ucc.ie/law/restitution/archive/englcases/jenkins.htm

Denis McCarthy
Tax Consultant, IRPC Taxation Services, a division of Croner Consulting

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By tom123
21st Oct 2004 08:52

Use working days
I have always used 260 working days in the year:

52 weeks * 5 days in the week for Mon-Fri.

Using 'their' method, could you then assume that if you had 5 days accrued leave, you should also get paid for the weekend that would fall at the end of the leave period had it been actually taken?

If they do calculate holiday pay at 1/365 of annual wages, then they also have to pay for weekend days, or else you are just being diddled!

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By User deleted
21st Oct 2004 20:46

Same as Tom
Agree with Tom:
annual salary /52 /5 = day rate. We use this as providers of payroll services and I know of other payroll providers that make the same calculation

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By AnonymousUser
21st Oct 2004 14:11

I use ave pay over preceding 12 weeks
The rules are contained in the Employment Rights Act 1996.

My interpretation is:
Holiday pay is accrued at the rate of 1/12 of the annual leave for each complete month of the holiday year worked.

The amount to be paid is the average pay per week over the 12 week period before the holiday is taken. My understanding is that this can include bonuses and overtime.

If the number of days worked per week is irregular then you will also need to calculate the number of days which constitute a holiday week. The number of days is calculated as the average number of days worked per week in the 13 weeks before the leave is taken.

As you suggest in your Q. my field is accountancy and taxation and not employment law. You might find the folks at ACAS can give a firm answer (www.acas.org.uk or 020 7210 3000)

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