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Pre-School Holiday Pay & SMP

Pre-School Holiday Pay & SMP

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We have a pre=school client for whom we prepare payroll.

They have a member of staff on maternity leave, we have run the usual calulcations for the 6 and 33 weeks. However, the question has arisen about their holiday entitlement which, like many such settings, is paid as a 12.1% add-on. We reckon that since the first siz weeks is based o the precededing varegae pay, which already includes 12.1%, then the holiday pay is implicilty included in their SMP for that first period. However, two questions arise:

1. Is that right, or should they still be paying 12.1% of their contracted regular pay?

2. What happens for the following 33 weeks - do they pay 12.1% of the statutory minium, or again base it on the regular pay?

Many thanks in advance (and a Happy New Year, almost!)

Replies (5)

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Euan's picture
By Euan MacLennan
29th Dec 2015 10:43

What do you mean?

Holiday entitlement is not paid - it is accrued and only paid when the employee actually takes holiday.  It is illegal to pay accrued holiday entitlement as holiday pay in lieu of days off, except when the employee leaves employment.

If the relevant period for calculating the average weekly earnings included paid holiday actually taken, it will be included in the total earnings used for working out (90% of) the average.

An employee cannot be on both maternity leave and annual leave simultaneously.  You pay her the standard rate of SMP (or 90% of average earnings if less) for the 33 weeks.  Her holiday pay entitlement continues to accrue during her maternity leave.

It is quite a common practice to take days off as paid holiday before starting maternity leave, but maternity leave must start on the day after the baby is actually born.

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Should Be Working ... not playing with the car
By should_be_working
29th Dec 2015 17:08

Term-time Staff

For term-time staff - who have to take holiday at set times and are not paid then - it's not uncommon (and is legal) to pay the holiday using the 12.1% method.

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RLI
By lionofludesch
30th Dec 2015 09:49

Wrong

should_be_working wrote:

For term-time staff - who have to take holiday at set times and are not paid then - it's not uncommon (and is legal) to pay the holiday using the 12.1% method.

Lots of thngs are common.  It doesn't make them right.

Agree with Euan - you're on maternity leave or on holiday.  Not both.

The employee is still entitled to holiday when she returns to work.

Her 12.1% should be calculated on her normal - or average - pay.

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Euan's picture
By Euan MacLennan
30th Dec 2015 10:48

Wrong, wrong, wrong!

should_be_working wrote:

For term-time staff - who have to take holiday at set times and are not paid then - it's not uncommon (and is legal) to pay the holiday using the 12.1% method.

Not only do you disagree with me and the Lion (which is tantamount to sacrilege!), but you disagree with the basic GOV.UK guidance on Rolled-up holiday pay and on Getting paid instead of taking holidays and with The Working Time Regulations 1998 Regs.13 & 16.

But you know best ....

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RLI
By lionofludesch
30th Dec 2015 13:52

Steady on ....

Euan MacLennan wrote:

Not only do you disagree with me and the Lion (which is tantamount to sacrilege!) ........

Steady on ........

But I agree - you have to have time off.  You can't just take the cash.

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