Holiday pay reference periods
The visibility of holiday pay on the payslip can result in an increase or reduction in employee queries in this area. 38% confirmed the holiday pay amounts weren’t separated on the payslip, however 26% showed it as daily rate, with 34% displaying holiday pay as an hourly rate. Others (14%) responded they added a top up to basic pay for holiday payments and 20% indicated they used another method. The split of practices here reinforces the complexity surrounding holiday pay, and highlights that a single method or process is not viable across multiple terms and conditions that exist across many businesses. The CIPP was also keen to understand, what, if any, pay elements were excluded from the holiday pay calculation. Employees and workers must receive normal remuneration while on holiday, therefore many pay elements such as regular overtime, shift premiums and allowances would usually be included in the calculation. The results are shown in full in the chart below. Surprisingly, 70% excluded car allowance from holiday pay, and almost one in three excluded overtime and shift premium. Almost 40% excluded commission. The volume of payroll professionals excluding these values from holiday pay calculations demonstrated there could be a high risk of non-compliance in this area.
Pay elements EXCLUDED from holiday calculation
Overtime
Shift premium
Bonus
Commission
Car allowance
Other
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