Average holiday pay

[Shiney Dave]

Hi all, I have a question pertaining to how average holiday pay is calculated.
the agency I'm working for deduct holiday pay from the average earning calculation which reduces my average pay for the 12 week average earnings calculation.
for example earning £500 per week. Average pay for a 12 week period would be £500 per week (total £6,000 / 12) however the agency do not take any holiday in to account therefore if I take a week holiday my average holiday pay then becomes £458 per week (£5,500/12) as they don't include holiday pay in the calculation.
it doesn't seem right that I am penalised for taking holiday.

Can anyone share any thoughts on this method of calculation please

[ULA]

If you have set working hours which stay the same each week, then holiday pay would be based on your normal week’s pay. However, if you do not have a set working time e.g. because you work different shifts spread over a number of weeks, or have irregular hours worked each week resulting in a different number of working hours each week, then this means that you do not have a set ‘normal week’s pay’, so instead holiday pay is calculated by taking your average weekly hours over the previous 12 weeks which are then multiplied by your average hourly pay for that period to give a week’s holiday pay.

If you do not have normal working hours and your pay differs from week to week, then a week’s pay for purposes of holiday pay is the average pay received per week for the 12 weeks immediately before the day the holiday starts.

This means that on each occasion you take time off, your pay has to be calculated using a new pay reference period. The result of this is that you may be due a different amount of pay for different periods of annual leave.

Hope this helps.

[Shiney Dave]

Thanks for the prompt response. i get the average holiday pay calculation but the bit i'm not getting is how they ignore any holiday pay paid to me when they calculate my holiday pay. over a 12 week period if i book a weeks holiday they don't count that weeks holiday pay as part of my average earnings however they do count the week as part of the 12 week timescale. so i have 11 weeks money but averaged over 12 weeks, this obviously has a detrimental effect on my holiday pay the next time i book a holiday. for reference i work a 40 hour week and have done for the last 12 months.

Surely average holiday pay has to be an average of everything i've been paid whether it's basic wage or holiday pay, they can't leave out any holiday pay as that reduces my holiday pay below my regular basic wage.

[ULA]

Do you work fixed hours or are you on a rota/shift pattern of work?

[Shiney Dave]

I work 8 hours per day. 40 hours per week.

[ULA]

If you are on fixed hours then your holiday pay will be calculated using your usual pay rate and there is no reference to the preceding 12 week period. The only other consideration would be whether you would normally earn commission or overtime during your holiday period.

[Shiney Dave]

Hi Ula, that's how I would expect it to be paid. There is no commission involved and they do not take into account any overtime worked when calculating the holiday pay. It seems a strange way to do it as if I don't plan my holidays at least 12 weeks apart I can be disadvantaged to the tune of just over £80 per week. Is this a normal way of calculating average holiday pay?

[ULA]

Sorry for delay in responding. In my opinion if your working hours do not vary then calculating holiday pay over the preceding 12 weeks is not the normal way to calculate your rate of pay. Holiday pay should be calculated using your normal pay rate.

[Shiney Dave]

Thanks Ula, I'm back in work on Friday so i'll tackle our HR department about it.

[ULA]

Good luck. Pop back on here and let us know how it goes or if you need any further support you know where we are