The accrual system can be one of the most time-consuming and tedious parts of the job for any HR specialist. Why does it have to be so complicated? And when it has to be calculated alongside other forms of leave, like sick leave and parental leave, things only get more complex.
But calculating accrued holiday for employees doesn’t have to be a headache. Like so many things in HR, once you know what you’re doing it gets quite easy.
In this post we’ll explain how to calculate accrued holiday for employees, before sharing a little secret that’ll make it as easy as possible.
Accrued Holiday and UK Employment Law
According to UK employment law, employees start to build-up – or accrue – holiday from the very first day they start their job.
How you calculate accrued holiday for employees will depend on how your “holiday year”, or “leave year”, works. Some businesses keep it simple, and make their leave year run from January 1 – December 31. Other businesses base it on the financial year, so that it runs from April to April. Some businesses like to set their own dates.
You need to inform new employees about how your leave year works when they start. You must also make it clear that you expect all employees to take their statutory leave during the leave year.
In case you need a reminder, statutory leave is 5.6 weeks’ a year for almost all UK workers. For those who work five-day weeks, this will extend to 28 days’ paid annual leave a year.
The leave year and employees’ holiday entitlement are not affected by other types of leave, such as maternity, paternity and adoption leave. Even if an employee takes a few weeks of maternity leave, she will still accrue holiday during this period.
How to Calculate Accrued Holiday When Someone Starts a Job Part Way Through Year
Let’s say your leave year runs from January 1 – December 31, and a new employee starts in April. They’ll only be entitled to a part of their total annual leave for the current leave year, and their leave entitlement for their first year will depend on how much of the year remains.
So how do you calculate their holiday entitlement?
Just think of it like this: Employees accrue 1/12th of their total entitlement each month. For an employee who joins you in April, their holiday entitlement will be based on the period running from April to the end of December.
This is 9/12 of a full year’s holiday allowance. If they’re a full-time member of staff entitled to 28 days’ paid leave a year, this employee who starts in April will be entitled to 9/12 of 28 days, which is 21 days.
For part-time employees the calculation is a little bit more complicated. Read our guide to calculating pro rata holiday entitlement here.
There are many online calculators to help you quickly calculate how much accrued holiday each employee has. We like the government’s calculator best, as it’s free and easy to use. Find it here.
Can Employees Carry Over Accrued Holiday into the Next Year?
If your employees get more than 28 days’ leave a year, then it’s up to you how many additional days of un-taken leave they can carry into the next year. In any case, to avoid any uncertainty, it’s vital that you specify your rules and policies in your employee contracts and company handbooks.
There are some circumstances in which you have a legal requirement to let employees carry over large amounts of annual leave into the next year. For example, employees who are off sick for long periods of time may not be able to take all of their statutory leave in a year. In this case, you must allow the employee to carry over up to 20 of their 28 days’ leave entitlement into the next year.
You might feel that this will be bad for business. After all, if an employee’s already missed large amounts of work due to a long-term illness, then you’ll want to get them back to work as soon as possible, rather than give them any more time off!
But your real priority should be ensuring that this employee is able to properly recover. All employees need to take a break now and then, and periods of long term sickness absence aren’t exactly a picnic. Letting an employee who missed lots of work due to sickness take further time off to relax and recover will be better for your business’s long-term productivity. They’ll return fully refreshed, and ready to give their very best again.
How to Manage Accrued Holiday Leave for Employees
Calculating accrued leave isn’t as hard as many HR professionals seem to think it is. But there is a lot to consider for every leave calculation you make.
So why not automate it?
Our absence management system can automatically generate detailed breakdowns of used, taken and remaining holiday allowance across teams and departments. Any employee can securely log on from any device to see how much holiday they’ve taken, and how much they have left to take. So you’ll never have to field another “how much holiday do I have left” email again!
Our simple paperless system typically saves organisations on average £289 per employee, per year. We’ve helped thousands of clients across the world streamline their absence management system. We can do the same for you.