Following a recent supreme court ruling, employers are no longer allowed to use the previous 12.07% uplift in a zero / variable hours part times workers salary to cover holiday entitlement.

Why can I no longer pay part time zero / variable hours workers an extra 12.07% to cover holiday ?

The courts have taken an approach that ensures employees are not financially disadvantaged when taking holiday, and believe it is unreasonable to expect an employee to have time off work without any form of income to cover the actual leave period.

What do I need to pay part time zero / variable hour employees whilst on holiday ?

Part time zero / variable hours employees whilst on holiday should be paid the equivalent of an average weeks / days wage.

This is calculated based on their average earning over 52 week worked pay data period.

If an employee has worked less than 52 week the pay data reference period should be as long as possible.

When calculating the pay data period employers must ignores any time an employee has had off work sickness or on holiday i.e. the average weeks wage needs to be based on 52 weeks of paid work.

How do i calculate holiday pay for part time zero / variable hours employees ?

1. Write down how many hours per week the employee worked each week for the preceding 52 weeks’ pay data

 ( note: the pay data period exclude weeks of statutory leave, sickness holidays)

1. Add the total number of hours
2. Divide the total by 52
3. This will provide your average number of hours worked per week
4. Multiple your average number of hours per week by your hourly pay

This will provide your average weekly pay.

Do I have to just calculate the average weeks pay once ?

No, the employees average weekly wage needs to be recalculated every time an employee takes leave, as the average weekly wage based on the proceeding 52 week pay period will have changed.

Its too much work and I can’t calculate every zero / variable hours employees average weekly wage when they go on holiday !

Unfortunately following this ruling, employers have no alternative but to work out every zero / variable hours employees average weekly wage.

When questioned over the amount of work this would create, the Inland Revenue simply stated it is for employers to find away to adhere to the law.  

Can I just pay part time zero / variable hours workers a flat number of hours based on their basic hourly rate when they are on holiday ?

As a part time zero / variable hours employee works different shifts and hours each week, their weekly earning may vary significantly week by week, therefore payment of any flat fixed rate would be unfair and unreasonable as they could be financially disadvantaged when they take holiday.

What happens if I just keep paying 12.07% for part time zero / variable hours employees ?

If you decide to just keep paying part time zero / variable hours employees an uplift in pay of 12.07% to cover holiday be prepared to find yourself in tribunal.