Working out holiday fairly and accurately can leave many grappling with spreadsheets or calculators. But what is pro-rata holiday and why is it important?
“EDI Training with Sophie was very insightful, lots of areas covered and opportunities given to understand topics better. Lots of examples given, no answer was the 'wrong' answer and all answers/opinions validated.” Read the full review
The term pro rata is Latin in origin and refers to the need to make an allowance in proportion, i.e a process that ensures everyone gets a fair share of the whole on a proportional basis. In the context of annual leave, it means that part-time employees or those who start or leave during an annual leave year will receive the same rate of annual leave as their full-time/full-year colleagues on a proportionate, pro-rata basis.
How much annual leave do I need to give?
In the UK, the minimum statutory amount of annual leave is 5.6 weeks, which is the equivalent of 28 days for full-time employees. The 5.6 weeks can include bank/ public holidays at the employer’s discretion. However, your starting point is the contract of employment which will set out the amount due as there may be an agreement to a higher contractual entitlement.
Valid reasons for making pro rata adjustments to annual leave entitlement:
- Part-time hours: pro-rata their annual leave to an entitlement which is proportionate to a full-time person in your organisation.
- Mid-year starter: adjust the entitlement based on how much of the leave year remains as at the start date of employment.
- Mid-year leaver: adjust the entitlement based on the amount of the leave year served.
- Mid-year change to contractual hours: the total entitlement for the year should be adjusted by weighting the amount of the year spent at each level of entitlement.
Why is it essential to pro rata holiday for part-time employees?
Part-time employees are protected under The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 from being treated less favourably on the grounds of their part-time status. Therefore, getting the calculations right is key to ensuring that legal obligations are met, complaints are prevented, and your employer brand is protected.
How do I pro-rata annual leave for my part-time employees?
The calculation required can vary based on the working pattern. If the employee will be working days of varying durations or more complex patterns, we would suggest managing their entitlement in hours to ensure accuracy. Some simple example scenarios are set out below:
If your business’ full-time hours are 37.5 per week over five days and one of your employees is reducing their hours to 20 hours per week over four days. You would calculate this in either of the following ways.
If your business processes annual leave in hours:
The full-time annual leave entitlement is 28 days, in hours the equivalent is 210 hours
Therefore, you would pro-rata by dividing 210 hours by 37.5 (full-time hours) and times it by 20 hours (the new weekly working hours).
The new annual leave entitlement is 112 hours, which is still the equivalent of 5.6 weeks of annual leave for that individual.
If your business processes annual leave in days:
The full-time annual leave entitlement is 28 days.
Therefore, you would pro-rata by dividing 28 by five days (the full-time working days) and times it by four days (the new weekly working days).
The new annual leave entitlement is then 22.5 days, rounded up from 22.4, you can round up to the nearest half or full day, but never round down! This is still the equivalent of 5.6 weeks of annual leave for that individual.
What about if my employee condenses their full-time hours into four days rather than five days? Do I pro-rata their leave?
This will depend on whether you calculate your annual leave in days or hours.
If days, then yes, as if they wanted to book a week off work, they would only need to take four days rather than five.
If hours then no, as their new working day will be longer and the amount of time they would book off for one day would be longer.
What happens if my employee changes their hours part-way through the annual leave year?
In this case, you will need to do a further pro-rata calculation by calculating the proportions of the year in which both entitlements will have accrued.
For example, if someone changes their hours exactly halfway through the year, you would pro-rata the initial amount of annual leave by six months and then the adjusted annual leave amount by six months and add them together.
What about if my employee works variable hours?
If your employee works variable hours and you are aware of the hours per week or month which they will do, you just need to ensure you do your holiday calculation in hours rather than days.
If you employ casual or zero-hour workers, they will not take annual leave in the same way, as they can just choose not to work. However, they are still entitled to holiday pay; the calculation for that person’s holiday entitlement needs to be paid at the average pay over a 52-week reference period (52 weeks they have worked – not 52 consecutive weeks). This topic is explored in more detail in our blog.
If you get stuck with the calculations, the Government have a calculator tool on their website which calculates the statutory annual leave amount: https://www.gov.uk/calculate-your-holiday-entitlement.