๐๏ธ Holiday Accrual Breakdown
๐ Overview
Holiday pay is accrued weekly for each employee into an accrual pot. When an employee takes holiday, their pay is drawn from this pot.
This helps keep labour costs stable across weeks, avoiding spikes when covering both holiday pay and replacement staff wages.
๐งฎ Holiday Accrual Calculation
๐น General Rules
- Hourly staff always accrue holiday pay (except agency workers).
- Salaried staff accrue by default, but this can be disabled by the organisation.
- Default holiday entitlement is 28 days, but this can be adjusted per employee.
โฑ๏ธ Hourly Staff Accrual
๐ Calculation Breakdown
- Holiday entitlement: 28 days
- Working weeks per year: 52
- Holiday weeks: 28 รท 5 = 5.6 weeks
- Actual working weeks: 52 โ 5.6 = 46.4 weeks
- Accrual rate: 5.6 รท 46.4 = 12.07%
๐ For each hour worked, 12.07% of wages are set aside in the holiday pot.
๐ Key Points
- Hourly employees accrue holiday only when working.
- Accrual is not evenly distributed across the year.
- This results in a higher accrual rate compared to salaried staff.
๐ Calculating Accrued Holiday Days
To calculate how many days of holiday an hourly employee has accrued:
- Divide the total holiday hours accrued by the employeeโs run rate.
- Run Rate = Average shift length over the last 52 working weeks (excluding weeks with absences), up to a maximum of 104 weeks.
๐ A โworking weekโ is defined as any week without absences.
๐ผ Salaried Staff Accrual
Salaried employees accrue holiday at a fixed weekly rate, regardless of hours worked.
๐ Example
- Entitlement: 28 days/year
- Weekly accrual: 28 รท 52 โ 0.54 days/week
- Annual accrual: 0.54 ร 52 = 28 days
If entitlement increases (e.g., to 33 days):
- New weekly accrual: 33 รท 52 โ 0.63 days/week
๐ The system automatically adjusts weekly accrual based on updated entitlement.
๐ Holiday Entitlement Changes
Holiday entitlement is set when an employee is created in S4.
If changed mid-year, the โin-yearโ entitlement reflects a blend of both rates, and accrual adjusts accordingly.
๐ Example
- First 6 months: 28 days entitlement โ 14 days accrued
- Last 6 months: 30 days entitlement โ 15 days accrued
- In-year entitlement: 14 + 15 = 29 days
๐ The system calculates blended entitlement automatically when changes occur mid-year.
๐ Accrued Days Exceeding Contractual Entitlement
An employee may end the year with more or fewer accrued days than their original entitlement. This typically happens when their average working hours change mid-year.
Example 1: Hours Decrease Mid-Year
- Starts year working 60 hours over 5 days โ Run rate = 12
- Accrues 7.2 hours/week
- After 20 weeks: 144 hours accrued
- Reduces to 30 hours over 5 days โ Run rate = 6
- By week 32: 187.2 hours accrued
- Converted to days (at new run rate): 31.2 days
Example 2: Hours Increase Mid-Year
- Starts year working 30 hours over 5 days โ Run rate = 6
- Accrues 3.6 hours/week
- After 20 weeks: 72 hours accrued
- Increases to 60 hours over 5 days โ Run rate = 12
- By week 32: 154.4 hours accrued
- Converted to days (at new run rate): 13.2 days
๐ In-Rota Holiday Cost
- The cost of holiday does not appear on the rota when taken โ it shows as ยฃ0.
- Holiday is costed as it accrues, not when taken.
- This spreads the cost evenly across the year, helping maintain stable weekly labour costs.
๐ก This helps teams meet weekly labour spend targets without spikes when holidays are taken.
Salaried Staff Note
- Accrual for salaried staff is optional.
- If disabled:
- Weekly cost is not reduced when holiday is taken.
- No accrual costs are added to their weekly cost total.
๐ Impact of Pay Frequency Changes on Holiday Value
When an employee changes pay type (e.g., hourly to salaried), the system uses terms and conditions to convert holiday balances.
Example: Hourly โ Salaried
- Employee has 26 hours in their holiday pot.
- New contract: 5 days, 40 hours/week โ 1 day = 8 hours.
- 26 hours รท 8 = 3.25 days of holiday.
Example: Salaried โ Hourly
- The system converts days into hours using the new contractโs terms.
๐ Applying Rest Days to Holiday Spanning Two Calendar Weeks
When a holiday spans two weeks (e.g., Wednesday to Wednesday), the system initially marks all days as paid leave.
Once shifts are logged, it updates based on actual rest days.
Example
- If no shifts are logged for MonโTue (Week 1) โ system assumes rest days โ 5 days paid holiday.
- If shifts are logged for MonโTue โ system pays 3 days holiday + 2 days worked.
โ ๏ธ If an employee has 0 contracted hours/days, you must manually adjust paid leave to avoid overuse.
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