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Leave Averaging in Workforce (UK)

This guide explains how Workforce helps UK employers stay compliant with holiday pay rules by using Leave Averaging feature to fairly calculate pay for staff with variable or irregular hours.

Updated over 3 weeks ago

Leave Averaging

Workforce helps employers stay compliant with UK legislation on holiday pay for employees with variable hours or irregular pay. By law, employers must use a 52-week reference period (up to 104 weeks if necessary) to calculate average pay for leave. This is known as the Holiday Reference Period.

Workforce supports two methods of leave averaging:

  • Automated Leave Averaging → The system automatically applies averages to leave requests.

  • Leave Averaging Calculator → Managers can manually calculate averages for specific requests.


Automated Leave Averaging

Automated Leave Averaging uses Workforce timesheet data to calculate average hours and costs automatically for leave requests.

  • Workforce looks back over up to 104 weeks of data.

  • At least 52 applicable weeks are used (or fewer if the employee has not worked that many).

  • Applicable weeks are those where the employee worked and did not take paid or unpaid leave.

  • Excluded weeks (e.g. no work performed, before employment started, or leave periods) are flagged automatically.

Note: For more details on the law, see:


Set Up Automated Leave Averaging

To set up automated leave avergaing:

  1. Go to Leave > Leave Types.

  2. Create a new leave type or edit an existing one.

  3. Under Costing Configuration, enable the setting apply leave averaging

  4. Save your changes.

Once enabled, Workforce will automatically calculate averages when:

  • A leave request is submitted manually.

  • A leave request is generated automatically (e.g. bank holidays).

  • Past shifts or leave requests are updated and affect averages.


Automated Leave Averaging on Timesheets

  • Leave requests appear like normal requests.

  • Hours and costs reflect the employee’s average over the last 104 weeks.

  • Values may change until the leave date passes and all timesheets are locked and exported.


Leave Averaging Calculator (Manual)

For employers who need flexibility or want to check specific leave requests, Workforce provides a manual Leave Averaging Calculator.

How the Calculator Works

  • Looks back over up to 104 weeks (or however long the employee has worked, if less).

  • At least 52 applicable weeks must be included, unless the employee has worked fewer.

  • Excluded weeks are flagged when:

    • The employee did not work that week

    • The week does not meet UK legislation requirements (e.g. leave)


Apply Leave Averaging

  1. Access the tool

  • Go to the staff profile of an employee with variable pay or irregular hours.

  • Select Leave Averaging from the left panel.

2. View the reference period

  • A table displays each week with:

    • Week number

    • Date range

    • Pay received

    • Hours worked

    • Checkbox to include/exclude the week (or orange warning if excluded)

  • You can bulk-select recommended weeks or clear your selections.

3. Review averaging data

  • Request duration (choose days or weeks)

  • Cost of leave for that period

  • Average pay per day/week

  • Average hours per day/week

  • Average days per week

  • Total pay and hours for selected weeks

  • Warnings if fewer than 52 weeks are selected

4. Adjust as needed

  • Manually include or exclude weeks (e.g. quiet or busy periods) to ensure fairness.


FAQs

What is the Holiday Reference Period?

The number of weeks used to calculate holiday pay averages: up to 104 weeks, with at least 52 applicable weeks required where possible.

Which weeks are applicable?

Any week where the employee worked and did not take paid or unpaid leave.

How does the calculator work?

It uses Workforce timesheet data from the past 104 weeks to calculate averages for pay, hours, and days worked.

What is my employee was furloughed?

Furloughed weeks are excluded. Ideally track these via leave requests, or deselect them manually.

Does it work for monthly-paid employees?

Yes. Workforce recognises pay frequency and will average leave costs accordingly.

What about seasonal employees?

You can include or exclude weeks to ensure the calculation fairly reflects seasonal work patterns.

Should allowances (bonuses, tips, commission) be included?

This is up to employer discretion. ACAS guidance offers advice, but the employer makes the final decision.

Can Automated Leave Averaging be used with leave in days?

Yes, provided costing configuration is set correctly.


Compliance Disclaimer

The Workforce Leave Averaging features are designed to comply with UK holiday pay legislation (as of March 2020), with guidance from ACAS.

We provide the best possible calculation based on Workforce timesheet data, but for unique or complex cases, we recommend seeking professional advice from ACAS or an employment law specialist.


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