Do deductions effect holiday pay?

Do deductions effect holiday pay?

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I have recently taken on a new payroll client and have been asked if I could check over the payments and deductions made previously as client Is no confident with the previous provider.

My client is a pre-school with staff working term time only. They are paid on a contract for 39 weeks and holiday accrued (and paid) using the 12.1% rule.

Often, overtime is paid (and holiday accrued on this).

Sometimes deductions are made for absence such as sickness. Does this need to be taken into account before or after applying the 12.1% holiday ruling? The contract is vague stating that absences will not be paid for - but surely, if you've not worked, you can't be entitled to holiday pay. Workers still get their holidays as they are can not be taken during term time.

Thank-you

Replies (5)

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Euan's picture
By Euan MacLennan
16th Feb 2015 10:11

I would agree with you

It is logical that if paid overtime affects the holiday pay calculation, then so should unpaid absence in the opposite direction.

However, I am not familiar with the "12.1% rule".  Does that rule shed any light on the issue?

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Euan's picture
By Euan MacLennan
16th Feb 2015 10:10

Duplicate posting

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By Marion Hayes
16th Feb 2015 11:03

Sickness period counts

I was Treasurer of a similar preschool.

Staff are still entitled to SSP and Holiday pay even if they are not specified in the contract and during sickness periods they continue to accrue holidays based on a previous average period if I remember rightly despite not being entitled to wages.

We paid 7 minutes holiday pay for every hour worked which is nearly that percentage - is that what you mean by the 12.1% rule? That was the outcome of the calculation recommended by DWP for termly paid workers.

You should also be aware that technically the law says payment of holiday pay should not be made until a holiday starts, and it has to be separately calculated and identified on a payslip - you can't just say pay £6.70 per hour including holiday pay. We paid it monthly on the basis that we were paying it sooner not later at our own risk so couldn't see how we could get more than a token telling off.

 

 

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By Peter Kilvington
16th Feb 2015 13:20

12.10% rule

The 12.10% or 12.07% is used to calculate holiday pay where employees have variable hours per week.

It derives from 28 / ((52x5)-28) where 28 is the standard holiday entitlement in days of a full time employee who works a 5 day week. It just allows a quick appointment of hours to holiday.

SSP and SMP periods accrue holiday pay so they should not be deducted.  Unauthorised absence, holiday etc do not accrue holiday pay so should be deducted.

Strangely I am in the middle of calculating holiday pay on this basis for about 100 employees so I can get a holiday pay accrual and make sure that the client knows where they are on holiday pay.

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By coraltolley
16th Feb 2015 16:45

Thank for the replies.

Thanks for the replies everyone.

I spoke to ACAS this morning and was advised that deductions should not be deducted from the holiday calculation.

If employees have unauthorised leave then a deduction is made at the daily rate/hourly rate but should not effect holiday calculations (!?!) Now I am totally confused.

The man from ACAS explained that it a person was off sick (and on SSP), then holiday would still accrue during this period. As employees were restricted to take holiday outside of term time, then it would be paid. On this basis, if an employee were absent even for one day, (logical reason for sickness) then this should be applied also an not effect their holiday pay.

Peter your explanation has he most clarity and the one I think I'll apply. The same with overtime can be applied - (post 4th Nov court case) ACAS recommendation is that were overtime is enforced or involuntary (such as compulsory training days additional to contracted hours) then holiday pay should be included. If voluntary, then no additional holiday needs to be accrued.

 

 

 

 

 

 

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