Posted: Thu Feb 14, 2008 5:55 pm Post subject: Holiday Pay
Some of our employees' contractual holiday entitlement is 20 day plus 8 bank holidays per annum.
If an employee starts with us on 1st Oct 2008, with the above mentioned holiday entitlemet & leaves on 30th Nov 2008 without taking any holidays, how many days holidays should we pay him with the final salary?
Is it:
1 20 day / 12 months x 2 months = 3.3333 days
OR
2 24 day / 12 months x 2 months = 4.0000 days
And also..........................
how does "The exclusion" work ?
Posted: Fri Feb 15, 2008 10:16 am Post subject: Holiday pay on termination
The Working Time Regulations indicate only that the holiday pay on termination should be in proportion to the period of the holiday year that has passed between the start of the holiday year and the leaving date, less any days of paid holiday taken in the holiday year to the leaving date.
The rules in the Working Time Regulations for paying up holiday pay on termination apply only to the period of statutory holiday entitlement, e.g. 4.8 weeks in a holiday year starting January 2008. How you calculate termination holiday pay for any contractual entitlement in excess of the statutory entitlement is entirely a contractual matter.
The most accurate method of calculating entitlement on termination is to use a daily calculation, i.e. the number of days in the holiday year to the termination date ÷ 365 (or 366) × annual entitlement. However, the Regulations state that, if the employer specifies a calculation method contractually, that method may be used. So, a whole month calculation is permitted, although the results are not always fair.
Note, however, that if a worker leaves less than a month after joining, or less than a month into a new holiday year, the contractual monthly calculation may indicate that there is no entitlement. In my personal view (although most employers do not do this and I have no evidence that an employment tribunal would enforce it), that would be in breach of the Regulations, or at least the intention of the Regulations, as there will always be some entitlement to holiday pay on termination, even if the worker has only worked for one day. In the case of a five-day worker who works 8 hours a day, for example, 1 day ÷ 365 × 24 days = 0.066 of a day, or just over half an hour.
With regard to the "exclusion", can you clarify please what this is? _________________ Ian Congreave, PayPerShop owner
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