By Michelle Quince, Senior accountant at Hive Business

Palm trees, sandy beaches and beautiful sunsets would all form part of my dream holiday. But, as a mother of two young boys, the reality is probably more likely to be a loud, sugar-fuelled, long-weekend at Butlins! It’s the same whether you’re an employer or an employee, everyone needs time away from their job in order to relax, unwind and come back refreshed and ready for new challenges.

The Government recognise the importance of holiday and stipulate that an employee has the right to 5.6 weeks of paid holiday in any given twelve-month period. This is known as statutory annual leave and an employer can include bank holidays as part of this entitlement. You will note that this is the minimum amount of paid leave that an employer must provide; they may provide more paid leave and this should be set out in the employee’s contract.

In a perfect world where all employees work five full days-a-week and remain with the same employer year-after-year, calculating holiday allowances is straight forward – each is entitled to 4 weeks plus bank holidays.

But in reality, calculating employee holiday allowances can cause a few headaches! You may have:

• part-time staff (working less than five full days-a-week –or- working less than the standard full-time hours);
• new employees joining (starting part-way through the holiday year);
• old employees leaving (leaving part-way through the holiday year); employees changing their hours (going from full-time to part-time or vice versa);
• casual staff (working irregular hours).

Provided your employees are entitled to the statutory annual leave allowance of 5.6 weeks a year, HMRC provides a useful calculator which will help to calculate the allowances in these circumstances.

We often get asked about the holiday entitlement for casual staff or those on zero-hour contracts. Although their contact may not outline a set working pattern, as employees they are still entitled to take paid holiday. The 5.6 weeks allowance still plays a role here, as casual staff are entitled to holiday equivalent to 12.07% of the hours worked (5.6 ÷ 46.4 (52 – 5.6)).

Finally and most importantly, I need to highlight that this is paid leave. Staff must be allowed time off from work and cannot be paid in lieu of holiday. Employment law is very clear on this and only permits paid holiday when an employee is leaving and they have untaken statutory leave.

So if you have a team of workaholics that refuse to take holiday, gently persuade them to book that cruise and see what magic a nice long break can do. It’ll be good for their health and good for your business in the long-run.You also don’t want to be organising the rota at the end of the year, unsuccessfully squeezing in everyone’s holiday entitlement à la Ryanair!

If we are your payroll provider and you have more questions please call 01872 300232 or email us at hello@hivebusiness.co.uk.