How to calculate employee holiday entitlement

how to calculate redundancy payment

One of the questions I’m most frequently asked is how to work out employee holidays.  It never ceases to amaze me how complicated holiday entitlement can actually get because it should be something really straightforward!

The following explanation for working out employee holidays applies when you have a full-time or part-time employee who works the same hours every week.  Other working arrangements have their own calculations to work out holiday entitlements, which quite often accrue on the basis of hours worked when an employee’s hours vary.

In the UK, there is a statutory minimum holiday entitlement which means that every employee working fixed hours is entitled to 5.6 weeks holiday (this includes their Bank Holiday/Public Holiday entitlement).  You can give more holiday entitlement than this, for example to reward employees with long service, but you cannot give any less than the statutory minimum.

To work out exactly how many days each employee is entitled to per year:

Number of days a week worked         X          5.6      =            Annual holiday entitlement

So, on that basis, an employee who works full-time, five days a week, is entitled to 28 days holiday per year (5.6 x 5) and an employee who works part-time,

three days a week is entitled to 16.8 days holiday per year (5.6 x 3).

A few points to note:

  • Where the answer is not a round number, you should always round up to the nearest half day.  For example, an employee working 3 days a week gets 17 days annual leave, although the actual entitlement is 16.8.
  • This calculation does not apply when an employee’s hours change from week to week.
  • The figures include the Bank Holiday or Public Holiday entitlements.  All employees get these entitlements, on a pro-rata basis if they work part-time, regardless of what days of the week they actually work.  Some people think if an employee doesn’t usually work Mondays then they don’t get the same Bank Holiday entitlement – that’s not correct.
  • Employees on maternity leave, parental leave and sick leave continue to accrue holiday entitlement during their absence.

It’s essential that you keep records of all employees’ holiday entitlements, holidays they take and holidays they are owed.  When an employee leaves, they will be entitled to receive payment for holiday they have accrued but not taken so you must make sure that you have accurate records.


Category: Bank

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