How do you calculate holiday entitlement and pay of someone on a zero hours contract?
People on zero hours contracts are entitled to paid just like regular staff. They must be treated as any other employee and are entitled to 5.6 weeks of paid holiday per year, which include bank holidays. This is calculated on a pro-rata basis, meaning the more hours worked, the more holiday entitlement the worker has accrued.
To work out holiday pay one commonly used method is the 12.07 per cent calculation. This is arrived at using the calculation of 5.6 (weeks of paid leave) divided by 46.4 (remaining weeks in the year). Using this method holiday is accrued at a rate of 12.07% per hour worked.
If a worker on a casual contract works ten hours in a week, then they would have accrued 1.2 hours holiday. (12.07% of 10). If the employee worked 30 hours, they would accrue 3.6 hours of holiday for that week.
To calculate average hourly pay rate, only the hours worked and how much was paid for them should be counted. Take the average rate over the last 52 weeks. If no pay was paid in any week, count back another week so the rate is based on 52 weeks in which pay was paid. You can count back a maximum of 104 weeks to find these.
If a worker has less than 52 weeks of pay, use the average pay rate for the full weeks they have worked.
To work out a week’s pay for someone who’s paid monthly, you can:
- Calculate the worker’s average hourly pay for the last month. Do this by dividing the month’s pay by the number of hours worked in the month.
- Calculate the weekly pay. Do this by multiplying the average hourly pay by the number of hours worked in a week.
Use the weekly pay calculation for each of the last 52 weeks to work out an average week’s pay.
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