What is the Calendar Week Method

Understand how the Calendar Week Method calculations are conducted in Planday and see its implications for employees' leave accounts.

Saad Saeed avatar
Written by Saad Saeed
Updated over a week ago

🎯 For admins and HR managers in the UK looking to set up leave.

The Supreme Court ruling in mid-2022 ruled that the percentage method for calculating annual leave accrual for some types of workers was not accurate and the Calendar Week method should be used instead. Planday developed the new Calendar Week Method in order to satisfy this requirement, and has also left the percentage method available in case you would like to use this method for other types of workers. Planday is unable to advise you on which method you should use for your specific circumstances and encourages you to understand the different methods using the articles on our help centre and obtain independent compliance advice in order to choose the correct method/s for your business.

On 1 January 2024, the UK government introduced a new Holiday entitlement reform for irregular workers and part-year workers that will come into effect on 1 April 2024. For businesses starting their holiday year before 1 April 2024, holiday entitlement calculations for irregular hours and part-year workers should remain unchanged in 2024 and the new legislation would only apply from the next holiday year. In such cases, it’s recommended to use the Calendar Week method. Businesses starting their holiday year on or after 1 April, 2024 should adopt the new legislation by the start of the 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.


General concept

All employees are entitled to 5.6 weeks of paid annual leave per year.

We work out the average weekly earnings and weekly worked hours/days for each employee.

Multiply that by 5.6 weeks to get the total entitlement for the year.

This differs from the percentage accruing rate because unpaid weeks will not be included in the average.

The calculation formula is as follows:

  • Total leave pay entitlement = 5.6 * (Total Earnings / weeks worked)

  • Total annual leave balance = 5.6 * (Total hours or days worked / weeks worked)


Which shifts are included in the calculation?

  • The calculation aims to include the previous 52 paid weeks' worth of shifts

  • If some of the weeks in the previous 52 are empty (no paid shifts), then worked weeks beyond that will be included to reach a maximum of 52 weeks, but never going back further than 104 weeks.

  • Only shift types that are selected in the account template will be considered as “worked shifts”.

  • If a week contains at least one paid shift (irrespective of length), that week will count as a paid week. For example, a week with 5 unpaid leave shifts will not be included but a week with 4 unpaid leave shifts and 1 normal paid shift will be count as paid, and that paid shift will be included in the average.

Start of week

End of week

Week pay

Week hours

Included?

09/01/2023

15/01/2023

No Pay

No Pay

Not Included

02/01/2023

08/01/2023

No Pay

No Pay

Not included

26/12/2022

01/01/2023

£804.17

64.33

Included

19/12/2022

25/12/2022

£706.25

56.5

Included

12/12/2022

18/12/2022

£200.00

16

Included

05/12/2022

11/12/2022

No Pay

No Pay

Not included


What happens if the employee is hired mid-holiday year?

If an employee is only hired for a proportion of the leave year, the employee will only be allocated that proportion of the total entitlement (e.g., leave period starts 01/04/23 and hired date is 01/07/23, the employee will get ¾ of the total entitlement calculated).


At which rate does the employee get their yearly annual leave entitlement?

  • Total entitlement for the year will be an evolving average that is initially calculated from the first day of the leave year, so can go up or down after every passing day.

  • Employees will not have access to the total balance from the start.

  • The total leave balance will gradually trickle into the account on a day-by-day basis until the last day of the leave year at which point the entirety of the balance will have been added to the employee’s account.

  • Calculation is done as per this formula:
    Balance today = Total entitlement * (days elapsed in leave year / total days in leave year). For example: 5.6 weeks * (61/365) = 0.94 weeks balance today.

The following example shows Employee 1 who works on average 20 hours a week for £10/h, earning on average £200 a week on working weeks. Their total entitlement for the whole leave year will be £1120 over 112 hours.

After 2 months: Employee 1 will have 19.02 hours out of 112 hours in their account

After 9 months: Employee 1 will have 84.69 hours out of 112 hours

After the whole leave year: Employee 1 will have 112 hours out of 112 hours


Example calculation

Hourly account:

Employee 1 (who was hired before the start of the leave year) has worked 500 hours over 25 weeks in the last 104 weeks, earning a total of £5000

  • Total leave pay for this holiday year = 5.6 * 5000/25 = 5.6 * £200 = £1,120

  • Total hours of annual leave available = 5.6 * 500/25= 5.6 * 20 = 112 hours

Employee 2 has also worked 500 hours over 25 weeks, earning a total of £5000. However, they were hired on 30/04/22, 30 days into the leave year:
Days hired in leave year = (365 – 30) / 365 = 92%

  • Total leave pay for this holiday year = 0.92 * 5.6 * 5000/25 = £1027

  • Total hours of annual leave available = 0.92 * 5.6 * 500/25 = 102.7 hours

Daily account:

Employee 1 (who was hired at the very start of the leave year) has worked 80 days over 20 weeks in the last 104 weeks, earning a total of £6000

  • Total leave pay for this holiday year = 5.6 * 6000/20 = 5.6 * £300 = £1,680

  • Total days of annual leave available = 5.6 * 80/20 = 5.6 * 4 = 22.4 days

Employee 2 has also worked 80 days over 20 weeks, earning a total of £6000. However, they were hired on 01/07/22, 183 days into the leave year:


Days hired in leave year = (365 – 183) / 365 = 50%

  • Total leave pay for this holiday year = 0.5 * 5.6 * 6000/20 = £840

  • Total days of annual leave available = 0.5 * 5.6 * 80/20 = 11.2 days


See related articles:

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