Pro rata holiday is a complex topic that often leaves HR professionals and business leaders confused.
But don’t worry, we’re here to cut through the jargon and provide clarity on even the trickiest HR issues.
In this guide, we’ll explain pro rata holiday in straightforward terms with plenty of examples and insights. Our goal is to equip you with the knowledge for accurately and fairly calculating holiday for any employee, ensuring compliance and engaging relations with your workforce.
Let’s dive in.
What is Pro Rata Holiday?
Pro rata simply means “in proportion”. It is about getting the equivalent paid time off regardless of number of hours worked in a leave year.
If someone works full time on 5 days of the week for a full leave year they are entitled to 5.6 weeks of paid holiday. You will sometimes see this written down as 28 days or 5.6 weeks. As you will see below, 5.6 weeks X 5 working days = 28 days.
Pro rata calculations account for when this isn’t the case, such as:
- Part-time schedules with fewer hours per week than full-time
- Part-time schedules with fewer weeks per year than full-time, such as term-time only workers
- New joiners who have only worked part of the leave year
- Leavers who have only accrued a portion of the full entitlement
Getting it right is crucial for legal compliance, Part-time and reduced hour employees are legally entitled to equal holiday pay proportionate to full-time colleagues. It also demonstrates fairness across your workforce, accurate payroll and that you value your employees and treat them equitably regardless of work pattern.
Important points to note before we continue:
- The examples given will be based on the legal statutory minimum amount of leave which is 5.6 weeks paid holiday and on a full time basis of 5 days worked over a regular 37.5 hour week.
- Holiday entitlement can come in the form of weeks, days and hours. If regular hours are worked each week, this is normally provided in the form of days or hours (hours are always best if people don’t work the same amount of hours each day of the week). If a casual worker, it is often easier to work out in weeks.
- If someone works more than 5 days a week they are entitled to either 28 days or 5.6 weeks whichever is lower.
- Holiday should never be rounded down, only up. Rounding down would be against the law.
- Exact figures should be used in the calculations and only round up the final figure (if necessary). This will avoid substantial errors as rounding all the way through will lead to a different figure at the end.
Calculating Holiday for Part-Timers over a Full Year
Regular Part-Time Schedules –
This is when someone has a fixed number of hours worked each week – This can be worked out in days or hours – and can be paid at normal rate of pay
Calculate holiday in days when: Someone works a fixed number of hours each week and these hours are evenly distributed across their working days. E.g. 4.5 hours Mon-Fri
Calculate holiday in hours when: Someone works a fixed number of hours each week but these hours are not evenly distributed across their working days. E.g. 4 hours Mon-Thur and 3.5 hours Fri.
Please view the below table to see how the number of days worked in a week affects holiday entitlement.
|Days Worked||Weeks Holiday||Days Holiday||Hours Holiday|
*Based on 37.5 hours evenly spread across 5 days
Days holiday calculated by:
Number of weeks holiday X number of days per week worked
E.g. 5.6 weeks X 5 days per week worked = 28 days holiday
Hours holiday calculated by:
Number of days holiday X average hours per day worked
Average hours per day is calculated by
Total number of hours worked / number of days per week worked
E.g. 28 days holiday X 4.5 average hours per day = 126 hours holiday
As noted earlier, you should only round up on the final stage of the calculation. So someone on 4 days, whose holiday is calculated in days, will get 22.4 days holiday, rounded up to the nearest half day or full day (whichever is closest) i.e. 22.5 days.
Casual or Irregular Schedules –
This is when someone does not have a fixed number of hours and / or days worked each week (Including term time only and zero hours workers) – This should be worked out in weeks – Should be paid at the average of the previous 52 worked weeks.
Organisations will find it much easier to manage leave and pay if only authorising holiday in week blocks. It’s important to remember that you are not necessarily obliged to authorise single days of holiday as long as workers have the ability to take their whole entitlement within a leave year. It is of course possible, if you deem it necessary to calculate average days or hours worked each week based on a reference period, however this cannot under any circumstances fall below the 5.6 weeks entitlement.
The importance of the term ‘worked week’ cannot be understated and is a significant cause of issues if not considered properly. A ‘worked week’ is a week where someone was able to carry out their usual duties, therefore if for any of the 52 weeks an employee received no pay at all, use an earlier week in its place for calculating holiday pay. If an employee only got a small amount of pay for a week (e.g. Statutory Sick Pay), use another week where they received their usual pay. This is because, as stated earlier, they should get paid the same when they’re on holiday as when they’re at work. In practice, therefore, you may need to count back beyond 52 weeks to get 52 weeks of ‘usual pay’, however, you should not look back any further than the previous 104 weeks.
New Starters and Leavers
Workers accrue holiday throughout the leave year as they build service. When they join or leave mid-year, calculations must reflect this.
For new joiners, you will need to pro rata their entitlement based on the remaining portion of the leave year from their start date. This is stated clearly and specifically in the Working Time Regulations 1998 Regulation 13. The easiest way to view this is that on day one of employment people are entitled to one twelfth of their full year entitlement, and each subsequent month after that they will receive another twelfth until the end of the leave year or they leave (whichever comes sooner). As most leave years start at the beginning of a month, to avoid doubt it may be pertinent to offer an additional one twelfth on the first of each month regardless of start date, alternatively the additional twelfth could be granted monthly from the start date e.g. 15th Jan, 15th Feb, 15th Mar etc.
By example, a simpler way of calculating this would be, if the leave year runs January to December and they join in September, they would be entitled to ⅓ of annual leave as they will work in the 4 months left in the year. Assuming 28 days for a full year, one twelfth would be 2.33 days. Multiply this by 4 months and you get a total of 9.33 (rounded up to 9.5 days).
For the other calculation, let’s say they started on 15th September they would be entitled to 3.5 months of leave therefore less than ⅓ of their leave. Assuming 28 days for a full year, one twelfth would be 2.33 days. Multiply this by 3.5 months and you get a total of 8.16 (rounded up to 8.5 days).
As you can see, the basis of calculation does matter and it is crucial to be consistent. Therefore, when onboarding new staff, clearly communicate their pro rata entitlement and the basis of calculation so expectations are set correctly.
Consider your accrual policies too (i.e. how leave entitlements accumulate or increase over time). Only the first year is legislated for regarding the specifics of accrual. Some businesses accrue all leave upfront, while others accrue monthly. Reaching fair, compliant outcomes requires understanding accrual models and pro rata best practices.
Employees only accrue the holiday pay they have earned up to final day at the organisation. The Working Time Regulations 1998 Regulation 14 calculates leave based on calendar days. This may seem different to how broad brush it was when accruing holidays, however this was created to protect the health, safety and wellbeing of workers and thus aims to benefit workers rather than organisations.
Regular part time schedules
When calculating holiday in days you should:
i) Calculate the worker’s full holiday entitlement (as above)
ii) Work out the proportion of the leave year in employment
You will need to work out the number of days between start and finish within this leave year; fortunately a quick Google search of ‘days between’ will provide you with helpful calculators. Now you are looking for the total number of days it doesn’t matter if they are worked days, weekends or holidays. You can divide that figure by the number of days in the leave year and multiply by 100. This will give you a percentage figure which you can use.
For example: Imagine a leave a year starting on 1st January and someone leaves 5th September 2023. That’s 246 days / 365 X100 = 67.4%
iii) Pro-rate based on the proportion of the year in employment
Once you have the percentage figure from the previous step you can calculate the amount of accrued holiday.
Using the example above and assuming they were entitled to 28 days holiday, this would be 67.4% of 28 days = 18.87 days (rounded up to 19 days).
When calculating holiday in hours you should:
Follow steps 1 to 3 to calculate days then instead of rounding up on the days you should multiply the number of days by the average hours per day.
Casual or Irregular Schedules
As stated when calculating holiday for a full year, the key measurement here will be in weeks. You will still need to do steps 1 and 2 from calculating holiday in days in this section but once you have that percentage you will need to pro-rate 5.6 weeks, not days or hours.
Using the example above where we calculated 256 days was equivalent to 67.4% of the year. You will need to find 67.4% of 5.6 weeks which is 3.77 weeks. As the holiday will be calculated in weeks, not days or hours, the entitlement of 3.77 weeks doesn’t need to be rounded up as that is the correct figure to calculate pay.
People can’t suffer a detriment for not working full time, so holiday should be pro-rated to ensure they receive the equivalent of a full time employee’s holiday. This can be calculated in weeks, days or hours with each calculation better suited to different types of ‘part-time’ working. The calculations are there to ensure you are as fair as possible and consistent when dealing with holiday. If you use the calculations outlined above, you will be doing just that.
Or if that seems a little daunting, you could…….
Let Government Tools do the Maths
If those calculations seem daunting and you only provide the minimum statutory amount, use the free holiday entitlement calculator from the UK Government for precise figures tailored to your circumstances: https://www.gov.uk/calculate-your-holiday-entitlement
Holiday isn’t the easiest thing to get your head around but that’s ok. Reading this will hopefully have cleared a few bits up for you and at the very least provided you with some reference material should you need it. When you are responsible for holiday in an organisation we would recommend the following:
- Understand legal requirements for equal pro rata entitlements
- Understand when to use
- Clearly communicate policies and calculations to staff
- Regularly review and update if arrangements change
- Refer back to the sections on here if needed
- Seek guidance if unsure on compliance practices
And above all, engage proactively and lead with empathy. Handled well, pro rata pay demonstrates you value equity, transparency and your employees’ needs.
Let Petaurum HR Provide Expert Guidance
We hope this guide provided clarity and confidence for managing pro rata holiday. Please get in touch if you need any tailored advice or support.
Our team has extensive experience guiding organisations on holiday compliance and calculations. We’re always happy to explain best practices and ensure you have the knowledge to handle these complex areas confidently.