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Holiday - Again!

I have enjoyed the long running holiday thread - but this got me thinking

Didn't find your answer?

So, I enjoyed the other holiday thread. As it happens we have just received updates from our external HR support on contracts of employment.

These seem to imply that you should also do some kind of backward looking calculation even when salaried staff take leave.

Surely no-one does this?

Consider, for example, a period after a pay rise - if you look backwards over 12 months then a person on holiday for a week would actually have a pay cut that month, as the average would include the pre pay rise salary?

At least reading the .Gov stuff I can see where the hideous furlough calculations were born..

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By Winnie Wiggleroom
30th Jul 2021 15:06

missed most of those threads, I did have a disgruntled client this week that had an employee on furlough for over a year, employee refused to take any holidays while on furlough and then resigned and demanded 4 weeks holiday pay be added to his final pay.
"so hold on, you've been on holiday on full pay for over a year, and now you want 4 weeks more money". yep I said, fraid so, you should have insisted.....

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Replying to Winnie Wiggleroom:
By Duggimon
05th Aug 2021 10:43

It wasn't up to the employee whether they took the holidays, for four weeks holiday the employer need only give eight weeks notice they are being compelled to take them.

I expect, from your final comment, you know that already though

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By Hugo Fair
30th Jul 2021 15:51

"Surely no-one does this?" - probably most don't ... but it would be correct to do so (despite the apparent anomaly to which your refer).
Technically speaking it's not a real anomaly, as that person was 'accruing' holiday entitlement during the holiday year - and so (in the good/bad old days) would've been accruing pay for holiday at different rates depending on pay that week ... which, in the case of a regular paid salaried employee, will work out the same as the new 'averaging' method!

If you want real examples of anomalies, you need to find an employee who changes their hours (say from full-time to 0.6 FTE) ... or two employees on same salary and hours, who go on holiday at same time but who did the same overtime hours in different weeks (51 and 53 weeks ago respectively).

Anyway I'd advise against admitting to anyone in HR (especially within the education sector) that you "enjoy" a discussion about calcs of holiday entitlement/pay! :-)

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Replying to Hugo Fair:
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By jeremybarker
06th Aug 2021 00:32

Before I retired I practised as an employment lawyer for several years. My observations over many years were that unfortunately very few accountants understand the rules on holiday pay and many HR people also get things wrong.

Under the Working Time Regulations only duration, never value, of holiday accrues during the year. The amount paid depends on a calculation at the time holiday is taken. With a salaried employee not entitled to any bonus or overtime payments (or anyone else paid the same amount every week) it's the weekly pay at the time the holiday is taken. It's only when pay varies from week to week (or month to month) that any averaging over time is required.

A person who changes from full-time to part-time (or vice versa) during the year but whose pay doesn't otherwise vary is paid according to their fixed weekly pay when they take any holiday - averaging doesn't apply to that situation.

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Replying to jeremybarker:
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By Hugo Fair
06th Aug 2021 00:30

Agree with all your points ... except for your final sentence.

Say employee earns £500 per week for a FT role (37.5 hrs/week on a 5 day-week) and then goes PT earning £200 per week (15 hrs/week still on a 5-day-week but shorter days) ... and takes no holiday during first 9 months of holiday year (which happens to be period when was FT).
In that scenario I believe the 52-week 'averaging' method should be used for rate ... otherwise they are unfairly penalised for not having taken holiday whilst on the higher weekly pay. Do you disagree?

FWIW your central point, that holiday entitlement (duration) and holiday pay (rate) are separate calcs, is understood by all good payroll software (possibly less so at the cheap or indeed cloud end of the market).

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Replying to Hugo Fair:
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By jeremybarker
06th Aug 2021 00:48

I absolutely disagree that averaging is allowable in the scenario you present. The law simply cannot be bent to allow it. Averaging only ever applies if pay can vary from week to week. If a person's pay falls they will appear to lose out (and conversely a person whose pay increases appears to gain) but that's also the case with all other things depending on the value of a week's pay such as redundancy payments and unfair dismissal compensation. Given that the principle behind holiday pay calculation is that a worker should be no worse off if they take holiday than if they work the outcome is not really unfair.

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Replying to jeremybarker:
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By Hugo Fair
06th Aug 2021 12:17

"I absolutely disagree that averaging is allowable in the scenario you present. The law simply cannot be bent to allow it" ... is an unequivocal statement.
Can you please reference the precise bit of law that is being bent?

I know that guidance is often not worth the (digital) paper on which it is written, but at https://assets.publishing.service.gov.uk/government/uploads/system/uploa... you'll find:
* "Where a worker is paid a regular monthly salary, with fixed hours and fixed pay, there is no need to make a separate holiday pay calculation. The worker will be paid their normal monthly amount for months where holiday has been taken.
For those workers paid monthly, but where their pay varies (for example, depending on the amount of work done) their employer will need to use the holiday pay reference period."

This does not say that a 'separate holiday pay calc' MUST not be used, merely that there is no need to do so (for obvious reasons in most cases, as it would be a waste of time just to end up with the same figure).
However, the phrase "where their pay varies (for example, depending on the amount of work done)" ...I would interpret as covering precisely my original scenario; so leading to the requirement (not merely option) to use the holiday pay reference period.

I have seen this approach endorsed by ACAS and, and at an entirely practical level, by Unions in the public sector. So, whilst I'm happy to learn every day, it would be useful to know the basis for you precluding the right to use 'averaging' whenever an employer chooses to do so - especially since such consistency is usually seen within ETs as an indicator of a non-discriminatory policy.

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By I'msorryIhaven'taclue
30th Jul 2021 16:50

Well your double-decker bus avatar and thread title made me think you were off on your Summer Holiday.

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Replying to I'msorryIhaven'taclue:
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By Hugh Simpson
30th Jul 2021 21:51

As sure as I may have encountered The Peter Pan of Pop on this website and my name is Simpson Hugh.

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By NYB
31st Jul 2021 19:40

Being part of the original holiday thread I too was thinking on this. Its not just ZERO hours over 52 weeks. Surely its any employees - including monthly salaried. And as you rightly say the calculations might not work in their favour. Its all a b****** muddle in my opinion. And none does it. How again do you start splitting monthly pay into weeks.

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By sallyrichardson
05th Aug 2021 10:21

Hi

See below from HMRC website - doesn't apply to salaried staff

Working pattern How a week’s pay is calculated
Fixed hours and fixed pay (full- or part-time) A worker’s pay for a week
Shift work with fixed hours (full- or part-time) The average number of weekly fixed hours a worker has worked in the previous 52 weeks, at their average hourly rate
No fixed hours (casual work, including zero-hours contracts) A worker’s average pay from the previous 52 weeks (only counting weeks in which they were paid)

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