Managing Leave

Do You Spend Too Much Time Calculating Holiday Pro-Rata?

Planning for a startup | LeaveWizard

Pro-rata holiday entitlement is a topic that seems to crop up all over the internet, at least in business forums and HR websites. Posts that you will find about pro-rata holiday calculations often become very complicated very quickly.

Take for example this post on a business forum from a few years ago. In that thread a manager is struggling to work out the holiday entitlement for a new employee starting work midway through the firm’s holiday year. A fairly simple request for help it seems. Well, perhaps, or maybe not. The first response talks us through a complex process:

“So if she was full time working 40 hours a week she’d be entitled to 25 days, which means she’s working 16/40 = 0.4 x 25 days = 10 days annual entitlement based on hours worked

or you can calculate based on the number of days worked so 3/5’s of the annual entitlement (assuming a 5 day week) = 15 days out of the 25 awarded to full time staff.

This is where the anomalie) usually creep in and where companies struggle with consistency.

Then you have that she will have worked 40 out of the 52 weeks a year, so you end up with either 7.69 days using the hours format or 11.53 using the days.

I’ve seen both used in workplaces, and what has to be clear is on what basis everyone is entitled to annual leave, is it the number of hours or number of days worked.”

 

A thorough answer, albeit one that made the original poster feel that she needed a good lie-down. Unfortunately, also an incorrect one. The search for a pro-rata holiday calculation continued, as another poster came along to correct the working:

“As the employee started work on 21 May 2007, she will have worked for 32 weeks by the year end, so her actual entitlement will be 9.23 days for 2007.

15 days entitlement per annum, divided by 52 weeks of the year, multiplied by 32 actual weeks in employment.”

That thread continues with other employers and workers trying to understand the calculations for part timers and factoring in public holidays.

That thread shows how complex it can be to work out pro-rata holiday entitlement, a fact that most business owners or managers will know. So how can you find your way through the mess? There are a few options.

Ask on online forums and communities

Following the example of the woman we’ve discussed above is one way to get answers. Particularly if you are a member of an active online business community, it can be a useful source of advice and support. There are, however, some potential pitfalls. Firstly, if you return frequently with similar questions, you may wear out the patience of your fellow members, especially if you ask for help more often than you give it. Secondly, as we saw above, the answers you get may not be correct, so you must treat any advice received with caution.

Use a spreadsheet to perform the calculation

Using Excel, or any other spreadsheet software, it is possible to create a spreadsheet that will perform the calculation for you. You can set this up so that all you need to do for each new starter is enter their hours and start date, to have the pro-rata holiday entitlement worked out for you. In order to do this though you do need a certain level of knowledge. Firstly, you need to understand the necessary calculation, so that you can have Excel recreate it. Secondly, you will need to be experienced enough with spreadsheets to write some fairly complex formulas. After you have your answer you will then need to transfer it you your leave management software, and you will have to perform this for each new starter.

Use an online calculator

There are a few calculators available online to help out with calculating pro-rata holiday entitlement. One of the best is on the UK government’s website about holiday rights. This is a simple tool to use, and being created by the government can be trusted to give correct answers. Unfortunately, it cannot be integrated into your annual leave management system. It also requires the entire questionnaire to be completed for every new starter, which can be a drain on your time, especially in an industry with high staff turnover, and will only give the right answer for the minimum legal entitlement in the UK.

Use high quality annual leave management software

Fully integrated annual leave management systems should include pro-rata holiday calculations as a part of the core software. At LeaveWizard we’ve integrated this feature from an early stage, because our customers told us that calculating pro-rata holiday is one of their biggest headaches. Our intuitive system can handle mid-year starts, part-time workers, unusual working patterns such as 4 days on, 3 days off and much more. It can also calculate entitlements for different countries and for additional contractual holiday entitlement such as extra days of holiday awarded for length of service.

LeaveWizard will take simple information about the employee’s working pattern and start date, apply your customised holiday rules and legal entitlements, and automatically apply them to the worker’s record. Their entitlement will then be included in our integtrated system for electronic applications, approvals and reporting.

Why not experience seamless annual leave management for yourself by taking a no obligation 30 day trial of LeaveWizard?