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.
Automated Leave Averaging uses Workforce timesheet data to calculate the average cost and hours for employees' leave requests automatically. 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.
For more information about the legal requirements, see the following:
Configuring Leave Types to use Automated Leave Averaging
First, you will need to have a leave type set up that applies hours and cost averaging.
To configure this, go to ‘Leave’ > ‘Leave Types’ to create a new leave type, or edit an existing one:
In order for the calculations and benefit to automatically apply, the leave type should have the following setting applied under “2. Costing configuration”:
Make sure to save your changes!
What is “automated”?
When the leave type is configured correctly, Workforce is able to support calculating the average hours and cost for staff leave requests in the following ways:
Whenever a leave request is created manually via the "New Time Off Request" form.
Whenever a leave request is created automatically, e.g. if "Create future approved leave for bank holidays" is enabled on the leave type.
Whenever a past shift or leave request is updated (where this affects the employee's average hours and cost over the previous 104 weeks).
What’s included/excluded in the calculation?
Workforce calculates the average hours and cost of an employee’s leave request by looking at historic timesheet data over the past 104 weeks
Weeks where the employee did not work and weeks before the employee commenced their employment are not included in the averaging calculation
Leave, overtime, and allowances are excluded from the calculation.
How averaged leave requests appear on the timesheet
Leave requests with automated leave averaging appear on staff timesheets like any other leave request.
The hours and cost shown on the leave request will reflect the average hours and cost worked by the employee over the previous 104 weeks.
Note that the hours and cost shown are subject to change until the date of the leave request has elapsed and all previous timesheets are locked and exported. This is to ensure the hours and cost accurately reflect the employee’s actual worked hours over the previous 104 weeks.
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 Automated Leave Averaging calculate average leave?
Automated Leave Averaging 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. It will then use this figure to determine the cost of leave for the employee's intended 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.
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.
Can I use Automated Leave Averaging with Leave In Days?
Automated Leave Averaging is not currently compatible with Leave In Days. You cannot have both options enabled for the same leave type at the same time.