In my last blog I looked at keeping leave fair for regular workers. There are a number of issues to face for workers who are less regular.
Firstly the Equal Pay Act says that people should be paid the same for the same, or broadly similar, work. There is also a recent principle (actually for BA pilots) that confirmed that leave pay should be based on average actual earnings.
Now these don’t really present a problem for regular staff. If you have two secretaries doing the same work then most people would have no problem paying them at the same rate, and their pay whilst on leave is the same rate as whilst they are working – simples!
But what about those really useful people that are friends of the business and are called in as and when to cover shortfalls in workforce availability? Because they are only paid when they work there is a danger that you may forget that they are entitled to paid holidays in the same way as other staff – a legal entitlement.
There are a number of ways to handle this. A popular one is to say that a secretary works 47 weeks and has 5 weeks off (for example). So the casual secretary who comes in when needed can be paid 1 + 5/47 of the secretary’s hourly rate, and this ensures that they are getting paid a bit of leave for each hour they work. Doesn’t it??
Well yes, it does. But the Working time Directive also requires you to be sure that employees take the leave that they are entitled to under the law. This method doesn’t really do anything about ensuring that.
Another way seems more complex, but has actually worked well in practice. Here is a worked example:
- Calculate the holiday ratio. For example if staff are normally entitled to five weeks holiday and 8 days bank holidays:
- Holiday days in the year – 25 holiday plus 8 bank holiday = 33 days
- Working days in the year – 52.143 weeks times 5 days = 260.715
- Holiday ratio is therefore 33/260.715 = 12.66%
So, consider a casual worker who has worked 36 hours in a month
- Hours worked in the month – 36
- 36 hours times the holiday ratio 12.66% = 4.56 hours holiday owing
You need to then keep a running total of the holiday hours owing, and at any time an hourly paid member of staff can tell you that they want to add some holiday hours to their pay for the month.
This then gives the clear advantage that on your pay records a casual member of staff is paid for some time they haven’t attended work – ie paid leave – and it also gives you an easy method of ensuring that their statutory leave gets used up. Both could be very useful if you ever get challenged to show how you are complying with the Working Time Directive!
This guest blog was brought to you by Clear Books user John Clegg.