How to Calculate Holiday Pay for Casual Workers

While it’s pretty easy to work out the holiday pay and allowance for full-time workers, (remember they’re entitled to 28 days off a year), it can be very challenging to work out holiday pay  entitlement for casual workers. 

There are over 5 million casual workers in the UK, and understanding how to calculate casual workers’ annual leave is crucial, especially if you work in HR or management. Thankfully, this blog will explain who casual workers are, the holiday pay system and how you can calculate holiday allowance for your casual workers.

What is a casual worker?

A casual worker or a zero hours worker is an employee who is employed on an ad-hoc basis. They are not permanently on the payroll and no work is obligatory. This means that they can accept or refuse the work that they are offered.

Zero-hour contracts are a perfect example of a casual employer/employee contract. They’re necessary in industries that need more workers at certain points of the year, such as farming or tourism. 

These zero-hour contracts ensure that working hours can be quickly doled out on short notice.

What rights do casual workers have?

Even though they don’t have to accept the work when offered, casual workers still have workers’ rights. They have the right to the national minimum wage, paid time off and other employment rights that full-time and part-time workers are legally entitled to as well.

No matter how irregularly you work or if you don’t work many hours, if you’re classified as a worker, you’re entitled to workers’ rights.  

According to the law all workers are entitled to: 

  • The national minimum wage
  • Paid annual leave
  • Statutory minimum length of rest breaks
  • Right to refuse work of more than 48 hours per week
  • Protection against discrimination and unlawful deduction from wages
  • Protection for whistleblowing

How much holiday time are casual workers entitled to?

Every employee is entitled to at least 5.6 weeks of statutory annual leave. For full-time employees, this works out to 28 days a year. For everyone else, including casual workers, the amount of holiday leave is calculated on a pro rata basis. 

The number of holiday hours a worker is entitled to is based on the number of hours they work on average. You should look over the past 52 weeks of their employment to calculate the average amount of working hours. 

However, if you’re trying to calculate the amount of holiday allowance for someone who has been working for less than a year, the reference period is shortened and will not include any periods that they did not work.

Why is it difficult to work out how much annual leave casual workers have?

It can be quite difficult to calculate casual workers’ annual leave – and not just from a maths perspective. There are a few issues which may trip you up when you’re figuring out how much holiday pay your employees are allowed.

Firstly, the government guidance on calculating holiday entitlement for employees with irregular working hours is rather vague. While according to the government, it is mandatory for employees to give 5.6 weeks of holiday leave annually, they give little guidance on how to calculate it. 

Secondly, full-time workers know how much holiday they’re entitled to every year. They can request holiday before they start in a new position, but casual employees don’t have the same amount of freedom because they can’t predict how much annual leave they will have every year. 

Thirdly, it can be difficult to calculate holiday leave during periods when workers aren’t working, since casual workers might have large gaps throughout the year when they have no shifts.

What percentage of wage is holiday pay?

How to calculate holiday pay for hourly workers? The 12.07% method is often the answer. The standard working year is 46.4 weeks which is 52 weeks – 5.6 weeks of holiday. 5.6 weeks is 12.07% of 46.4 weeks, and 12.07% of each hour worked is accrued holiday. 

This calculation includes bank holidays so workers should not get any further entitlement for these. If you use this method, for every hour worked, a worker receives seven minutes of holiday. 

Additionally, if you offer contractual holiday on top of the statutory amount, you will need to adjust the percentage to include this and so you can ensure that the holiday allowance is accurate.