Managing Holiday Pay calculations during a pandemic

The COVID-19 pandemic has led to many either cancelling or postponing their holidays, but as summer comes to an end, employees are finding they have an abundance of holidays left to take.

The result has been a surge of requests for time off, in which employees are opting for either a trip within the UK, now being branded a ‘staycation’ - or some are braving the boarder and booking last-minute flights to one of the green-lighted areas.

Either way, payroll professionals must be ready to manage the increase in requests and associated processes.

In particular, the calculations required for Holiday Pay need added focus, following the legislative changes at the beginning of April.

Especially as the UK entered lockdown in March, meaning many payroll professionals have had little exposure to the new calculations.

To support, we will recap the changes from 6^th April so you can ensure your processes are compliant and correct.

A quick recap of the changes to Holiday Pay

The April changes now require you to increase your reference period from 12 to 52 weeks when calculating Holiday Pay for variable hour workers.

The 52-week reference period will, in essence, work the same as the previous 12-week period - however, there will be significantly more data to analyse.

When conducting your calculations, you should only use full weeks where pay was received, so any weeks that an employee hasn’t been paid won’t count.

If an employee doesn’t have 52 full weeks of pay, you should use as many full weeks of work as possible for the calculation.  

Additionally, factors such as contractually obliged overtime worked during the reference period need to be included in the employee’s Holiday Pay.

How can IRIS help with the new calculations?

To support payroll professionals with these changes, we created the IRIS Holiday Pay module that automatically configures the processes, so you never have to do a manual calculation again.

You can download our handy factsheet here which further demonstrates the difference in processes between automated and manual calculations, or if you’d like more information on the module, click here.

Additionally, to efficiently manage the influx in requests, you’ll also need a flexible HR software.

IRIS HR Professional offers a modular solution that allows employees to view, update and manage their own personal data, such as holiday entitlements, training days, performance reviews and sick days.

Get your free trial of IRIS HR Professional here.