New Holiday Pay System - Questions and Answers

New Holiday Pay System - Questions and Answers

The new holiday pay system will come into effect from 1 April 2015 for zero hours employees and guaranteed hours carers. We know that you may have some questions so have tried to answer them here.

The Annual Leave and Authorised Absence Policy contains more information and is available on the intranet or from your line manager. If you still can’t find the answer to your question, please speak to your line manager or the HR Service Centre.

Note: This guidance only applies to all employees engaged under a zero hours contract (including care staff, out of hours, cleaners, cooks, ancillary etc) as well as all guaranteed hours carers. For the avoidance of doubt, it does not apply to guaranteed hours employees who are not carers.

The new system applies slightly differently for zero and guaranteed hours employees and the guidance below distinguishes between the two, where appropriate.

1. Why do holidays accrue at 10.77% of my pay?

a. Zero hours employees

Your “holiday pot” accrues at 10.77% of your eligible gross pay because that is equivalent to 5.6 weeks’ holiday each year. Holidays will accrue as a monetary figure to help improve transparency for you.

All employees are entitled to take 5.6 weeks’ holiday each year (inclusive of bank holidays) calculated on a pro rata basis depending on the number of days that you actually work, which is your statutory entitlement. For an employee working 5 days’ each week, that equates to 28 days’ holiday per year.

Not all of our staff work regular work patterns (i.e. they don’t always work the same number of days or hours in a week). To ensure fairness for those employees it is necessary to accrue holidays as the work is done.

By accruing at 10.77% of eligible gross pay, your “holiday pot” accrues holiday on all pay elements (i.e. basic pay, overtime, sleep-in payment, on call payment, any uplifts, etc). It is also not capped as to how much can accrue in the pot. This ensures that you are paid a fair amount when you do take holidays.

To help show you that 10.77% is the same as 5.6 weeks (statutory holidays), here is an example:

A carer earned £10,000 in a year.

That amounts to £192.30 per week (£10,000 divided by 52 weeks).

5.6 weeks holiday = 192.30 x 5.6 = £1076.92

The carer therefore received £1,076.92 holiday pay for the year.

Using the new system, £10,000 x 10.77% = £1,077.00

The carer therefore receives £1,077 holiday pay for the year.

b. Guaranteed hours carers

Your pro rata holidays based on your contracted guaranteed hours remains unchanged. The 10.77% accrual applies to the additional eligible payments you receive for work in excess of your guaranteed hours (i.e. overtime, sleep-in payment, on call payment, and any uplifts).

10.77% is used because over the leave year it equates to the same as 5.6 weeks, which is statutory holidays. The calculation in the above answer for zero hours explains why.

When you take holidays you will therefore receive your pro rata holidays based on guaranteed hours and the 10.77% accrued on any additional work you carried out. This helps ensure you will receive an average day’s pay for a day’s holiday.

2. How can I find out how much holidays I have to take?

Your line manager can tell you how much is in your “holiday pot” at any time. By dividing your holiday pot by your average days’ pay, it tells you how many days’ holiday you have left. Your line manager can assist with confirming your average day’s pay, which will be based on the previous 12 weeks.

3. What pay elements does 10.77% accrue on?

a. Zero hours employee

For a zero hours employee, 10.77% accrues on all of the pay you receive for work. That means it accrues on your basic pay and any uplifts such as visit or NVQ allowance. It also accrues on the holiday pay you receive. That is because it applies to your eligible earnings on the full 52 weeks of the year. This ensures that you accrue holiday for all the work you do for us.

It does not accrue on sick pay, maternity pay or any other payments you receive when not working.

b. Guaranteed hours employee

For a guaranteed hours employee, 10.77% accrues on everything above your contracted guaranteed hours.

That means it accrues on everything you are paid for work in excess of your basic pay. It therefore accrues on any pay you receive for overtime and any uplifts you receive such as visit or NVQ allowance etc. It also accrues on the element of your holiday pay in excess of your basic pay.

It doesn’t accrue on your basic pay because under your contract you receive a pro rata holiday entitlement for those basic hours. We therefore apply it to the pay in excess of basic pay to ensure that you receive holiday pay for all the work you do for us. 10.77% does not accrue on sick pay, maternity pay or any other payments you receive when not working.

4. Does holiday pay accrue on my overtime?

Yes. You accrue holidays on all of the pay you receive for work.

5. Is there a cap to how much holiday pay I can accrue in the “holiday pot”?

No. There is no cap or limit to how much can accrue in the “holiday pot”. There is also no limit on the number of days’ holiday you can take. Provided there are funds in your “holiday pot” you will be allowed to take the holidays, subject to the Annual Leave & Authorised Absence Policy and your line manager’s approval.

6. Can I take holidays before I have enough funds in the holiday pot (i.e. before I have accrued them)?

a. Zero hours employee

If you are a zero hours employee and have less than 12 months’ continuous employment, you are required to have sufficient funds in your “holiday pot” at the time of taking the holiday.

If you are unsure if you will have sufficient holidays in your “holiday pot” you should speak to your line manager.

If you are a zero hours employee with more than 12 months’ employment you are entitled to take your holidays before they have accrued in the holiday pot, subject to approval from your line manager.

Note: Any holiday request is subject to the operational requirements of the business and line manager approval. You should refer to the Annual Leave and Authorised Absence Policy for more details. If holidays have been taken in excess of the “holiday pot” at the end of a leave year or on termination those amounts will be recovered from any outstanding pay owed to you.

b. Guaranteed hours employee

If you are a guaranteed hours employee you can take your holidays based on your guaranteed hours at any time, subject to approval from your line manager.

Your “holiday pot” which accrues based on all pay in excess of your basic pay (i.e. overtime, uplifts etc) will only be paid if it has accrued at the time the holiday is taken.

7. Will I be paid the holiday pot at the end of my employment?

If your employment ends for any reason (except if you are dismissed for gross misconduct), you can request for the accrued “holiday pot” to be paid to you. The payment in lieu of any holidays at the end of your employment will be subject to the normal deductions of tax and national insurance.

8. Does this effect any holiday request which has already been granted by my manager?

This should not effect the holidays that have already been approved by your line manager.

9. Can I still carry over holidays?

Housing & Care 21 encourages all employees to take regular breaks throughout the course of the holiday year. However, if employees wish to they can carry over up to 5 days’ holiday into the following leave year. Where an employee carries over holidays they must be taken by the end of June.

Your “holiday pot” with a value of up to 5 days’ pay is therefore allowed to carry over to the next holiday year.

Any holidays in excess of 5 days will not carry over and will be lost. If holidays are carried over but not taken before the end of June they will be lost.

10. What will happen if I have taken more holidays than in my “holiday pot” at the end of a leave year or when my employment ends?

If you have taken more holidays than your entitlement at the end of a leave year or at the end of your employment, the “holiday pot” will be a negative amount. In those circumstances, that amount would be deducted from your final pay (if you have left) or from your next pay packet (if you are still employed).

If you are still employed your line manager will tell you how much holiday you owe and the amount that will be deducted from your pay. If deducting that amount from your next pay packet would cause you difficulties, a phased repayment may be agreed.

Employees and line managers are encouraged to act sensibly when requesting/granting holidays to help avoid the situation where holiday has been taken in excess of the “holiday pot” at the end of the holiday year.

11. What will I be paid when I take a day’s holiday?

For each day’s holiday you will receive a day’s pay, which is based on your average pay.

For zero hours employees that amount will be deducted from your “holiday pot”. You can take holidays in multiples of half or full days only.

For guaranteed hours employees your holidays based on your guaranteed hours are as stated in your contract. When you take your holidays, if you have been working overtime or received uplifts you will have funds in your “holiday pot”. Your line manager will add a pro rata amount from the “holiday pot” to your holiday pay so that it reflects your average day’s pay.

12. When will the new holiday pay system come into practice?

The new holiday pay system will come into effect from 1 April 2015, for the new leave year. Because you work in arrears, the first pay date where your “holiday pot” will start to accrue is payroll week 3, which is 20 April 2015. Your line manager will therefore only have access to your “holiday pot” from that date.