🟡 This feature is limited to the UK. It is to be used for part-year or irregular-hours employees.
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✅ Required steps: How to set up the UK 2024 accrual method.
ℹ️ Important read: How to create leave accounts.
The new rules apply to holiday years beginning on or after April 1, 2024. If your holiday year started before this date, you may continue using your current accrual method but will need to switch to the new method in the next holiday year.
If you are unsure of what leave employment terms are correct for your business or your employees, we encourage you to visit gov.uk or seek legal advice.
If you want to set up the 2024 accrual method, either 12.07% or rolled up leave, go to How to set up the UK 2024 accrual method.
How does leave accrual work?
Both options - 12.07% accrual or rolled-up leave accrue hours in the same way.
To calculate annual leave accrual, we will follow these steps:
Step 1: Calculation of accrual for worked hours within a Pay period
Employees accrue:
At 12.07% of the hours they work in their Pay period.
On the last day of the Pay period.
The shifts included in the calculation of accrued hours are:
The shifts* with the shift types that are chosen in the leave policy, typically the regular hours (“normal” shifts), the overtime hours, Training/Induction. Annual leave and statutory leave (sick leave, maternity leave, paternity leave etc) are not to be included here.
* These shifts have to be approved in Planday to be included in the calculation of accrued hours.
If there are no statutory leave shifts in the Pay period, Planday will go directly to Step 3: Final calculation and rounding and round the accrual value to the nearest hour.
The calculation is as follows:
Total number of hours worked within the Pay period x 0.1207 = Worked hours accrued within a Pay period.
See an example:
See an example:
Employee A is paid monthly, on the 1st of the month and started working from April 1. The employee hasn’t had any statutory leave nor annual leave since they started.
Employee A worked the following periods:
Pay period 1: From April 1 - April 30: 176 hours
Pay period 2: From May 1 - May 31: 184 hours
Pay period 3: From June 1 - June 30: 160 hours
Pay period 4: From July 1 - July 31: 40 hours
For Pay period 1, the employee has accrued 21 hours. > 176 x 0.1207 = 21.243 rounded to 21.
For Pay period 2, the employee has accrued 22 hours. > 184 x 0.1207 = 22.208 rounded to 22.
For Pay period 3, the employee has accrued 19 hours. > 160 x 0.1207 = 19.312 rounded to 19.
For Pay period 4, the employee has accrued 5 hours. > 40 x 0.1207 = 4.828 rounded to 5.
Across all Pay periods, the employee has accrued 67 hours.
Step 2: [Optional] Calculation of accrual for statutory leave
Note: This step occurs only if there are statutory leave shifts such as sick leave or family related leave within the Pay period.
To calculate how much holiday an employee has accrued during a period of statutory leave, Planday needs to work out their average working day.
In order to determine what an average working day is, Planday will:
Look back to the previous 52 weeks from the week before an employee starts statutory leave and sum up all the hours in this reference period.
A week starts on a Sunday and ends on a Saturday.
Weeks when the employee was on statutory leave (sick leave, maternity leave, etc.) or annual leave do not count.
Weeks when the employee did not work (but wasn’t on leave) do count.
Divide the total of hours by 46.4 to get an average work week.
Divide by 5 to get the daily average.
Multiply this daily average by the number of days within the statutory leave period.
Calculate 12.07% of this number.
The calculations are as follows:
Total number of hours worked within the previous 52 weeks / 46.4 = Average number of hours per week / 5 = Average working day.
Total hours accrued during the period of statutory leave = Average working day x Number of days of statutory leave.
Total hours accrued during the period of statutory leave x 0.1207.
See an example:
See an example:
Employee B is paid weekly, on the last day of the week and started working from April 1.
The employee was off sick one week in June.
From April 1 to May 31: the employee worked
From June 3 to June 7: the employee was sick
From June 10 to July 31: the employee worked
To have the total of hours the employee has accrued, Planday does the following calculations:
Find out how many hours the employee has accrued based on the hours worked (excluding annual leave and statutory leave).
In the example above, the employee has accrued 72.42 hours (rounded to 72) on hours worked.
Find out how many hours the employee has accrued while on leave.
In the 52 weeks from the week before the employee starts statutory leave, the employee has worked 360 hours.
360 / 46.4 = 7.758 * 0.1207 = 0.936 rounded to 1.
The employee has accrued 1 hour while on leave.
When we add both results, we have the number of hours accrued in total:
72 + 1 = 73
Step 3: Final calculation and rounding
On the last day of the Pay period, Planday will add the accrual for worked hours to the accrual for statutory leave and round the total to the nearest hour.
Rounded down to the nearest hour if it’s less than 30 minutes.
Rounded up to the nearest hour if it’s 30 minutes or more.
If the employee doesn’t have any statutory leave in the Pay period, we just round the accrual for worked hours to the nearest hour.
This total is then added to the employee’s account on the last day of the Pay period.
Holiday pay calculation
Note: Planday calculates the monetary payout of leave accrued, but doesn’t calculate it with rolled-up leave.
For rolled-up leave, we recommend configuring the payout in your payroll system to ensure accurate calculations based on the total payment in each Pay period.
To calculate an employee’s pay for a week’s leave, Planday will:
Look back at their previous 52 paid weeks and take their average pay, excluding empty weeks and weeks with annual leave requests or statutory leave starting from the week before the leave.
For every empty week or week including leave we go back an additional week up to a maximum of 104 weeks.
Weeks are counted from Sunday to Saturday.
Only full weeks are considered. For example, if an employee’s hired date is midweek, that first week is not included in the calculations. Similarly, if a leave request starts on a Thursday, the reference period starts the week before.
If an employee has less than 52 weeks of pay, the average pay rate for the full weeks they have worked is used.
Determine the average hourly wage over the 52 paid weeks.
The calculation is as follows:
Average hourly wage = Total earnings in reference period / hours worked in reference period.
See related articles:
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