Updated UK legislation instructs employers to use a 52-week reference period to average the cost and hours for an employee who receives variable pay or who works irregular hours.
The Leave Averaging Calculator uses Workforce timesheet data to help managers calculate the average cost and hours for employees' leave requests. For employees without fixed hours or pay, Workforce calculates this by using timesheets from the previous 104 weeks or the number of weeks they have worked for you if this is fewer than 104 weeks. This is known as the Holiday Reference Period.
To access the Leave Averaging Calculator
Navigate to a staff profile of an employee who receives variable pay or works irregular hours and choose 'Leave Averaging' on the left panel.
Reading the Table
The weeks within the holiday reference period are displayed in a table:
The table displays:
The week number (out of the total number of weeks worked in the holiday reference period)
The dates for the beginning and end of the week
To view the timesheet for a week, click on the date shown for that week.
The amount the employee was paid in that week
The number of hours the employee worked in that week
A checkbox for including/excluding the week from averaging.
Users can also select or deselect recommended weeks in bulk:
Select Recommended will select the applicable weeks we recommend you should use for averaging an employee’s leave.*
Clear Selection will deselect all weeks shown in the table.
Excluded weeks
Weeks that have an orange warning icon instead of a checkbox have been purposefully excluded from the averaging calculation due to:
They do not meet requirements set out in the UK legislation that make them applicable for leave averaging.*
The employee did not work that week (no costed hours)
Hovering over the orange warning icon will display a tooltip explaining why this week was excluded:
Reading Averaging Calculation Data
The left column of the calculator displays all the information necessary to make calculations for averaging hours and costs for employees' leave requests:
Displayed information:
Request Duration: The select menus allow you to define a range of days or weeks for which you need to calculate the cost of leave.
Cost of leave for a selected duration displays how much pay the employee should receive for your selected range.
Average pay per day/week shows how much pay the employee received on average per day/week over the course of the weeks selected from the table.
Average hours per day/week shows how many hours the employee worked on average per day/week over the course of the weeks selected from the table.
Average days per week displays the average number of days an employee works which constitutes a 'week'
Selected weeks display how many weeks you have selected from the table that will be included in the leave averaging calculation.*
Total pay for selected weeks shows the total amount of pay the employee received over the weeks selected from the table.
Total hours for selected weeks shows the total number of hours the employee worked over the weeks selected from the table.
Selected weeks
An orange warning icon is displayed next to the number of selected weeks if this does not meet the minimum required number of weeks for leave averaging. The number of weeks required to select for averaging is 52 weeks or the number of applicable weeks that the employee has worked at the organisation if it is fewer than 52.*
Hovering over the orange warning icon will display a tooltip explaining how many weeks you are required select for leave averaging:
*A week is applicable for averaging if the employee has worked hours for that week and did not take paid or unpaid leave. This is based on advice from ACAS.
Disclaimer
The Leave Averaging Calculator is suitable for use for employees who meet both of the following criteria:
They receive a variable rate of pay OR work on irregular/zero-hour contracts.
They are paid weekly.
The calculator does not automatically adjust the cost or hours for a specific leave request. It is designed to give you a quick reference for how much you should pay an employee for a given period of leave. You will still need to manually update the values in payroll and leave requests to reflect the calculations given in the leave averaging calculator. We recommend utilising the calculator within the next working week of an employee's leave request to ensure the most accurate cost calculation.
The calculator assumes that the beginning of the week on your Workforce timesheets matches the beginning of your work week for the purpose of calculating your pay period. If you use monthly timesheets, Sunday will be used as the beginning of the week. Users must have accurate and up-to-date information in their timesheets, employee rates of pay, and previous leave requests.
The calculator is designed to be compliant with UK legislation for Holiday Pay as of March 2020. We do our best to offer a compliant figure based on our interpretation of the law, but for individual cases, we advise that you speak to ACAS or a legal professional.
FAQ
What is the holiday reference period?
The holiday reference period refers to the number of weeks used to average an employee's leave. This is 104 weeks or the number of weeks the employee has worked for an employer, whichever is fewer. Of these 104 weeks, at least 52 must be selected for averaging or the maximum number of applicable weeks if this is fewer than 52.
Which weeks are considered applicable for leave averaging?
According to UK legislation and guidance from ACAS, any week in which an employee worked and did not take leave is applicable for leave averaging.
How does the Leave Averaging Calculator calculate average leave?
The Leave Averaging Calculator uses Workforce timesheet data from the previous 104 weeks (the holiday reference period) to make its calculations. It is important to keep your timesheets, employee rates of pay, and previous leave requests up-to-date to ensure accuracy.
Up to 52 applicable weeks will be automatically selected from the reference period to calculate the average pay/hours for an employee per day or per week (depending on which option have selected from the dropdown menu). It will then use this figure to determine the cost of leave for your selected duration.
My employee was furloughed during the holiday reference period. How do I ensure their leave costs are averaged correctly?
Weeks in which an employee was Furloughed are not considered 'worked weeks'. Ideally, any weeks in which an employee was furloughed will be tracked via leave requests to account for the period. This will ensure that those weeks will be automatically excluded from the leave averaging calculations. Otherwise, these weeks can be manually excluded from the calculation by deselecting those weeks from the table.
Does the calculator calculate leave for employees who are paid monthly?
Yes! Workforce can recognise the frequency in which an employee is paid by their Pay Period. Provided their Pay Period is set to 'Monthly', Workforce will average their leave costs appropriately.
My organisation is seasonal so my employees have very quiet periods for parts of the year. How do I ensure their leave costs are averaged fairly?
To ensure that seasonal employees are receiving a fair amount of pay for leave, you can manually include busy weeks or exclude quiet weeks from the leave averaging calculation.
What are allowances and should I include them in the leave averaging calculation?
Allowances are any costs not directly associated with worked hours such as tips, commissions, bonuses, etc. The legislation contains advice on what should and should not be included outside of a worker's normal pay but ultimately this is up to the employer's discretion. For individual cases, we advise you to speak to ACAS or a legal professional.