What is Holiday Accrual? A Guide for HR Managers
Written by: Rinaily Bonifacio
Last updated: 21 November 2023
Table of contents
What is holiday accrual?
Holiday accrual is a system that allows employees to earn paid time off from work based on the number of hours they work. It is an essential aspect of employment that determines how much holiday time an employee is entitled to and how this holiday time is paid.
In the UK, holiday entitlement is governed by statutory and contract laws. The statutory minimum holiday entitlement is 28 days per year for full-time employees, which includes bank holidays.
However, many contracts and company policies provide additional holiday time. It is essential for employees to be aware of their holiday entitlement and for employers to ensure that they are meeting their obligations.
How holiday accrual works
In a holiday accrual system, annual leave a year is typically accrued based on the hours an employee works. For example, an employee working a full-time schedule of 40 hours per week may accrue two weeks of holiday time per year, while an employee working part-time may accrue holiday time on a pro-rata basis.
This pro-rata calculation considers the work hours a staff works compared to a full-time schedule so that part-time employees are entitled to a proportional amount of holiday time. The holiday entitlement is calculated where the full year's holiday allowance is calculated based on the work hours.
To calculate accrued holiday, employees may be able to carry the holiday leave time to the following year, but they must use their accrued holiday time on time. Employees may be entitled to be paid for new statutory leave time if they leave work. This pay-out is typically calculated based on the employee's average pay over 12 weeks.
Holiday entitlement laws in the UK
Holiday entitlement Laws within the UK stand today; full-time employees are eligible to receive a minimum of 28 days of leave per year. Adding on any other bank holidays, these individuals will have an array of days off throughout the year. Importantly, these laws apply to workers regardless of their employment status; be it part-time, casual etc.
The calculation for part-time staff is then carried out pro-rata based on their hours compared to a full-time employee. Consequently, Leave Entitlement Laws to provide flexible support to various kinds of working individuals living in the UK.
What is pro-rata holiday entitlement?
Pro-rata holiday entitlement is the amount of leave year an employee is entitled to based on their work hours compared to a full-time schedule. For example, if staff works a part-time schedule of 20 hours per week, they may be entitled to half the holiday time of a full-time employee working 40 hours per week. This is because their work schedule is half the size of a full-time schedule, so their total annual leave is also half the size.
Pro-rata holiday entitlement is calculated on a percentage basis, based on the number of hours an employee works compared to a full-time schedule. For example, if a full-time employee is entitled to 28 days of holiday per year, and staff works a part-time schedule of 20 hours per week, they would be entitled to 14 days of holiday per year (28 days x 20 hours/40 hours = 14 days).
Pro-rata holiday pay entitlement ensures that part-time staff are entitled to a proportional amount of holiday time based on the number of hours they work. It is an essential aspect of employment for both employees and employers to understand, as it determines how much holiday time an employee is entitled to and how this holiday time is paid.
Managing holiday accrual
Managing holiday accrual is an essential job for both employers and employees. Employees should keep track of their holiday year, as it's possible to become entitled to additional days off if the annual leave provided doesn't cover the whole year.
Employers can help facilitate this by providing a system for tracking employee holiday accruals, such as a holiday accrual spreadsheet or software, to ensure all employees have their entitlement accurately accounted for. Managing holiday time wisely can save everyone hassle further down the line and prevent misunderstandings or disputes over how much holiday an employee is entitled to.
What if an employee leaves with an accrual deficit?
Employees who leave their job with an accrual deficit may be entitled to be paid for unused holiday time. This pay-out is typically calculated based on the employee's average pay over 12 weeks. Employers are responsible for accurately tracking and paying out holiday accrual for their employees to ensure they receive their full entitlements.
Employers may have different policies for leave pay for employees who work irregular hours or shift patterns. It is important for these employees to understand how their holiday pay is calculated and to keep track of their holiday accrual.
Other types of leave
In addition to holiday time, there are other types of leave that employees may be entitled to, such as:
Maternity leave is a statutory right for expectant mothers, and some employers may also offer paternity leave for fathers. It is essential for employees to understand their entitlements and for employers to have policies in place for these types of leave.
Holiday accrual is an essential aspect of employment that determines how much paid holiday time an employee is entitled to and how this holiday time is spent. In the UK, annual entitlement is governed by statutory law and contracts, with the statutory minimum being 28 days per year for full-time employees.
Both employees and employers need to understand and manage holiday accrual to ensure that employees receive their full entitlements and to avoid disputes. In addition to holiday time, employees may be entitled to other types of leave, such as sick leave, parental leave, and adoption leave. Employees should check their employment contracts for additional information and contact their employer if they have any questions or concerns.
Frequently Asked Questions
Holidays are typically paid at the employee's regular rate of pay. The payment method will depend on the employee's wage payment schedule and the terms of their employment contract.
For example, an employee paid a salary may receive regular compensation while on holiday. In contrast, an employee who is paid an hourly wage may be paid for the specific number of hours of holiday time they take.
The amount of holiday accrual an employee can claim will depend on their annual entitlement. In the UK, the statutory minimum leave entitlement for full-time employees is 28 days per year, which includes bank holidays. Part-time employees and other workers are entitled to a pro-rata holiday based on their work hours.
Many employment contracts and company policies provide holiday time beyond the statutory minimum. Employees' holiday accrual may also be affected by any new holiday time they carry over from the previous year.
Yes, in some cases. Under UK law, employees can carry over up to four days of the holiday into the next leave year (e.g., from 31 December to 1 January). However, this carry-over is subject to the employee's employment contract and additional company policies. It is essential to check with your employer if you are unsure.
In some cases, employees may be able to take their annual entitlement in advance. This will depend on the terms of the employment contract and any additional company policies. If an employee does bring a holiday in advance, employers may require them to work extra time or make up the time upon returning from their leave. It is essential to check with your employer if you are unsure.
Rinaily is a renowned expert in the field of human resources with years of industry experience. With a passion for writing high-quality HR content, Rinaily brings a unique perspective to the challenges and opportunities of the modern workplace. As an experienced HR professional and content writer, She has contributed to leading publications in the field of HR.
Please note that the information on our website is intended for general informational purposes and not as binding advice. The information on our website cannot be considered a substitute for legal and binding advice for any specific situation. While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website.
Ready to try Shiftbase for free?
Save time and money
Ready to try Shiftbase for free?Try for free