UK Payroll automatically manages holiday pay calculations. Holiday pay can be determined by the rate of pay for an employee's holiday based on your company's historical 52-week average, or by using rolled up holiday pay.
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- The aim of the 52-week average holiday pay calculation is to ensure that employees receive the same amount of pay they would if they were in work and aren't disadvantaged by taking vacation. To begin this calculation, employers must average 52 weeks of historical data of a worker's pay. Holiday pay calculations are relevant for salaried workers and workers without fixed hours or fixed rates of pay.
- Hours worked by variable paid employees, and any other regular pay such as overtime, bonuses, and commission should also be included in this calculation.
- You can also use rolled-up holiday pay, which means that you'll pay your employees an additional amount on top of their hourly wage to account for their holiday entitlement. Rolled-up holiday pay is typically used for employees with irregular hours.
Note: If an employee is on a salary sacrifice scheme, the salary sacrifice deductions will reduce the pay used to calculate rolled-up holiday pay.
How to set up holiday pay
- From the left side bar, select Employees.
- Select the relevant employee.
- Navigate to the Absences tab.
- Click Edit in the Holiday pay scheme tile.
- In the Holiday pay scheme drop down, select the scheme you want to use to calculate holiday pay (None, Rolled Up or 52-week calculation). Click Save and apply.
How to add holiday leave
- From the left side bar, select Employees.
- Select the relevant employee.
- Navigate to the Absences tab.
- Click Add holiday leave.
- Enter the Leave start date and whether the start date is a Full day off or a Partial working day.
- Enter the Leave end date and whether the end date is a Full day off or a Partial working day.
- Toggle off Paid leave if the leave is unpaid.
- Click Continue.
- Review the calculations. Then, click Save and continue.
- Click Save and close.
How to download the holiday pay report
Download and view the holiday pay report to understand the holiday pay calculation.
Note: To calculate the rate, total the Hours and Values, using the override lines if necessary. Then, divide the total value by the total number of hours. This gives you the rate that is being used to pay out the holiday pay.
- From the left side bar, select Employees.
- Select the relevant employee.
- Navigate to the Absences tab.
- To the right of the holiday record, click the three dot menu > Download holiday pay report.
FAQs
How can I set up 52-week holiday pay calculation?
Contact Support for help in setting up the 52-week holiday pay calculation if it isn't currently available to you.
How do I select which rate is included in the calculation?
All additional rates are selectable when calculating the pay to be used for the 52-week average calculation. You will need to select the specific items you would like to include in the calculation.
How does 52-week calculation work?
When the 52-week toggle is enabled, Bob UK Payroll can automatically spread cash-based pay items across the pay period. This approach is best suited for cash-based values (rather than hourly rates or hours worked).
When hours are used, a date must be added, and the hours are assigned to that date instead. This should be based on when the hours are worked. UK Payroll can only add dates to the current pay period.
You can import up to 104 weeks of historical data. This provides enough history to calculate a 52-week average even when some weeks may not count toward the average (for example, if there are weeks without relevant pay data).
Then, employees can be assigned to either the 52-week average holiday scheme or the rolled-up holiday scheme. Pay rates are configured using multiplier rates or fixed (set) rates.
Can we bulk import rates used in the 52-week calculation?
Yes. You can bulk import rates into employee profiles and payslips using Import pay rate work hours. The rate names must match exactly for the import to map correctly.
Historical hours and rates cannot be imported for previous payroll periods. Only the current payroll period is supported for hours and rate imports.
Note: When additional rates are enabled, the standard Rates import is no longer available.
What happens if the employee’s 52-week average pay is lower than base pay?
The system can use base pay as a fallback when the 52-week average is lower. To enable this, navigate to Settings > General and select Use base rate if this is higher than average holiday pay rate under Holiday pay policy.
Is there a cap on deductions when using monthly calendar day calculations?
There is currently no cap on deductions when using monthly calendar day calculations. In some cases, this means deductions may exceed the holiday pay amount.
Is there a top-up payment option for holiday pay?
There isn’t currently a top-up payment function. Instead, holiday pay is handled through a split payment and deduction on the payslip. To learn more about deductions, see Enter deductions and entitlements in Bob.
What happens if a sync start date is set before the current payroll period?
If a sync start date from Bob is set before the current payroll period:
- The system will backdate deductions.
- It will not backdate the corresponding holiday pay.
This is also true when holiday dates are added directly into UK Payroll and are not synced from Bob.