This will typically be a week from Sunday to Saturday, but it could end on another day of the week if a worker is paid on a weekly basis. Rolled-up holiday pay is to be paid in addition to the worker’s normal salary, which should be at National Minimum Wage or above. If annual leave is carried over where a worker is paid using rolled-up holiday pay, the leave will already have been paid at the time the work was done.

• Rolled-up holiday pay is to be paid in addition to the worker’s normal salary, which should be at National Minimum Wage or above.
• Under the Employment Rights Act 1996, the holiday pay reference period starts from the last whole week ending on or before the first day of the period of leave.
• How to Convert an Annual Interest Rate to a Monthly Rate Financial Formulas Components.
• Annual leave cannot be taken during a period of maternity leave.

If employers introduce changes to terms and conditions, they must seek to reach an agreement with their workers or their representatives. Another example involves a business charging its customers 1.5% per month on any past due balance. The monthly rate of 1.5% can be converted to 18% per annum by multiplying the 1.5% times 12 months in a year. When it comes to contracts, per annum refers to recurring obligations or those that occur each year throughout an agreement. For example, if a bank charges an interest of 3% on a loan per annum, it means that you will need to pay an additional 3% of the principal amount every year until the end of the contract.

1 How statutory holiday entitlement is accrued

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• If their employer chooses to use rolled-up holiday pay, then the entire amount of their leave for irregular hours and part-year workers will be paid at the ‘normal’ rate of pay.
• All full-year workers, except those who are genuinely self-employed, are legally entitled to 5.6 weeks of paid statutory holiday entitlement per year.
• Where workers work a fixed number of hours each week but not the same number of hours each day, the legislation does not state how to incorporate the 28-day statutory cap when calculating their full annual leave entitlement.
• When it comes to contracts, per annum refers to recurring obligations or those that occur each year throughout an agreement.
• Sharon accrued 1 hour of statutory holiday entitlement while she was off sick.
• Four weeks of this entitlement must be paid at a worker’s ‘normal’ rate of pay (as specified by Regulation 13 of the Working Time Regulations).

First period of maternity or family related leave or period off sick (19 weeks of shared parental leave for Sharon). If a worker leaves their job part-way through a leave year, a calculation should be completed to check the worker has received the statutory minimum holiday entitlement to which they are entitled. This includes part-year workers who may have fixed hours, for example, teaching assistants who only work during term time, and who are paid only when working.

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Paul would not qualify as an irregular hours worker if his contracted hours are fixed during both week 1 and week 2. Given that Paul does not work overtime, it is not the case that his hours worked are wholly or mostly variable. Instead, Paul’s hours are fixed (just worked in a rotating shift pattern). The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations. All the illustrative holiday pay calculations provided in this guidance use gross pay data (before any taxes or deductions). At the end of their contract (termination of employment) they should be paid in lieu for all holiday accrued during this 2-week period.

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Any weeks with time off sick or on maternity/ family-related leave are also excluded from the reference period. Instead, additional earlier paid weeks accounting for natural resource assets and depletion should be included to achieve the 52-week total. A definition for irregular hours workers and part-year workers has been set out in regulations.

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In this example the supplier is giving up 2% of the invoice amount in order to be paid 20 days early. PA stands for “per annum” and is used when calculating the total amount of interest that will be charged over a year. This guidance sets out the changes to the Working Time Regulations which the government introduced on 1 January 2024. While you can earn interest on your savings, if you borrow money then you may have to pay interest on top of what you borrow.

Harold Averkamp (CPA, MBA) has worked as a university accounting instructor, accountant, and consultant for more than 25 years. He is the sole author of all the materials on AccountingCoach.com. To compute the rate per annum we restate the amounts by multiplying both the “2%” and the “20 days” by 18 (in order to get close to the 365 days in a year).

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An employer must allow a worker who is unable to take their statutory holiday entitlement as they are on maternity or other family related leave to carry over all their holiday entitlement to the following leave year. Therefore, this worker’s holiday entitlement would be calculated as 13.04% of actual hours worked in a pay period. Workers with regular hours and fixed pay must receive the same holiday pay as the pay they would receive if they were at work and working. For example, workers typically on a fixed monthly salary, if they take a week’s holiday, they will receive the same pay at the end of the month as they normally receive.

After the first year of employment, a worker gets holiday entitlement based upon their statutory and contractual entitlement. Their entitlement will be based upon the proportion of a week which they are contracted to work. Employers using rolled-up holiday pay should calculate it based on a worker’s total pay in a pay period. A pay period is the frequency at which workers get paid, that is weekly, fortnightly, monthly, and the like.