By Rosie Campbell, Thrive. 30th December 2024

As the New Year begins, many UK business owners are reviewing their annual leave policies to ensure they’re compliant and fair. Whether your holiday calendar runs from January to December or April to March, getting holiday calculations right is essential for employee satisfaction and avoiding costly mistakes.

For small businesses, holiday entitlement can be particularly tricky, especially with part-time and flexible workers. Add to that the 8 bank holidays and a statutory minimum of 20 days, and it’s easy to see how errors creep in.

In this guide, we’ll break down how to calculate annual leave, what to do if employees feel your system is unfair, and how Thrive. can help streamline your approach for 2024.

Understanding Statutory Annual Leave

In the UK, employees are entitled to 28 days of paid annual leave (5.6 weeks), which includes 20 statutory days and 8 bank holidays [1]. However, how this entitlement works depends on several factors, including whether your employees work full-time, part-time, or on a flexible schedule.

Full-Time Employees

For full-time staff working 5 days per week, the calculation is simple:

• 28 days (5.6 weeks) of holiday per year, which can include bank holidays.

Part-Time Employees

For part-time staff, annual leave is calculated on a pro-rata basis. For example:

• If an employee works 3 days per week, their entitlement is:

3 days x 5.6 weeks = 16.8 days per year.

Flexible or Irregular Hours

For employees working irregular hours or shifts, entitlement is based on the total hours worked. This is typically calculated as:

• 12.07% of hours worked (5.6 weeks as a percentage of 46.4 working weeks) [2].

Common Issues with Holiday Calculations

Even with the best intentions, mistakes can happen. Here are some of the most common pitfalls:

1. Miscalculating Part-Time Leave

One of the most frequent errors is failing to pro-rate leave correctly, particularly when bank holidays are included. If part-time staff don’t work on a day when a bank holiday falls, employers must ensure they still receive their full entitlement, either as extra leave or pay.

2. Unclear Policies for Carryover

By law, employees must take at least 4 weeks of their statutory leave during the holiday year. While employers can allow carryover of additional leave (e.g., the remaining 1.6 weeks), unclear policies can lead to disputes [3].

3. Irregular Hours and Overtime

Calculating leave for workers with irregular schedules or overtime can be complex. Many employers forget to factor in holiday pay based on average earnings over the previous 52 weeks, as required by law [4].

4. Perceived Unfairness

Employees often feel that holiday entitlements are unfair, particularly when comparing full-time and part-time arrangements. Lack of transparency in how leave is calculated can exacerbate these perceptions.

What to Do If Employees Feel Holiday Entitlement Is Unfair

Holiday entitlement disputes can harm morale and trust. Here’s how to handle them effectively:

Review Your Policy

Ensure your holiday policy is clear, compliant, and accessible to all employees.

Communicate Proactively

Be transparent about how entitlements are calculated, especially for part-time and flexible workers.

Consider Compromise

If employees feel they’re losing out on bank holidays or other entitlements, consider offering additional leave to balance the scales.

Seek Expert Advice

If disputes persist, consult an HR professional to review your policy and resolve concerns.

Is Carryover Legal?

Yes, but with restrictions. Under UK law, employees must take at least 4 weeks of statutory leave within the holiday year. The remaining 1.6 weeks (and any additional contractual leave) can be carried over if your policy allows it.

During exceptional circumstances, such as long-term illness or pandemic-related disruptions, unused statutory leave can be carried over for up to two years [5].

How Thrive. Can Help

At Thrive., we know that managing annual leave can be a headache, especially for small businesses with limited resources. That’s why we offer tailored solutions to simplify your holiday entitlements and ensure your business stays compliant.

Policy Reviews and Updates

We’ll review your existing holiday policy to ensure it’s legally compliant, fair, and easy to understand.

Simplified Leave Calculations

From pro-rata entitlements for part-time staff to irregular hours calculations, we’ll help you get it right every time.

Transparent Communication

We’ll work with you to create clear guidelines for your employees, reducing disputes and improving trust.

Carryover Management

We’ll help you set up a fair and legally compliant system for managing unused leave, avoiding unnecessary confusion or risk.

A Simple System for Tracking Leave

If you’re still using spreadsheets or manual processes, we can recommend and implement an easy-to-use leave management system that fits your business.

Start the New Year with Confidence

The start of a new holiday year is the perfect time to review your annual leave policies and fix any issues before they become problems. With Thrive., you’ll have the peace of mind that your entitlements are fair, compliant, and easy to manage.

Contact us today to schedule a review of your holiday entitlements and find out how we can simplify your HR processes for 2025.

References

[1] GOV.UK. Holiday Entitlement and Pay. Available at: https://www.gov.uk/holiday-entitlement-rights

[2] Acas. Annual Leave for Part-Time Workers. Available at: https://www.acas.org.uk/holiday-entitlement

[3] CIPD. Holiday Entitlement FAQs. Available at: https://www.cipd.co.uk

[4] Personnel Today. Holiday Pay for Irregular Hours Workers. Available at: https://

[5] Acas. Carry Over of Holiday Leave. Available at: https://www.acas.org.uk/carrying-over-holiday