Many businesses choose to run an accrual system—it’s part of an annual leave process.
Annual leave will begin building up once an employee begins working with your business. You have to use a leave year and an accrual system.
While the accrual system can dictate the entitlement to paid holidays in the first year of employment, leave years must be used for every year of employment.
This’ll work out how much leave you can offer to individuals in your workforce. Remember, this is only for their first year of employment—after that, they have entitlements to the full statutory minimum paid.
You can use the government’s holiday accrual calculator for the UK to work out how much holiday days to offer to your members of staff.
Don’t forget, if you have any holiday and staff planning needs you can rely on our staff holiday planner to easily sort out your workforce’s upcoming time off.
There’s also the rest of this guide, which offers more details into how to go about this process.
What is the accrual holiday system?
A basic holiday accrual meaning is it’s a system where you calculate holidays as the annual business year goes along.
A common example is holiday accrual per month. Where an employee builds up 1/12th of a holiday over the course of a working month.
By the third month, they can take a quarter of their paid annual holiday time. By the third month, that means they can have seven days of leave. But this would only apply if the employer provides the statutory minimum.
This approach to annual leave can suit some business’ better than others, so consider how it may affect your staff.
But remember that you can choose to override the accrual provisions. That’s if a relevant agreement contains equivalent or more generous terms—but you can’t apply less generous terms.
To work out holiday accruement, you can use a formula. This formula is in use to work out entitlement to leave—if you provide the statutory minimum.
And the employee has been working for them for three months. This is:
- 28 / 12 x 3 = The amount of leave available.
However, keep in mind the formula will change if you provide more days. For example, if you provide 33 days per annum, it’s 33/12.
Holiday pay accrual—how it works
Members of staff have entitlement to 5.6 holiday days each week of holiday pay per year. So, it’s a type of hourly holiday accrual.
For part-time workers, this is on a pro-rata basis. You can offer more—that’s up to your business.
If an employee has worked overtime, case law dictates that overtime should be included if it is involuntary.
For example, the employee must work it as part of their contract.
So, remember to add holiday accrual on overtime into their pay.
Holiday accrual during maternity
Employees develop their holidays as normal during their time away from work.
For maternity leave and holiday accrual, if the member of staff can’t take this annual leave because of their maternity leave, then you should allow them to carry that over into the new working year.
So with holiday accrual, maternity leave staff receive the same pay, will continue to accrue the holiday days, and can carry that over into the next working year.
Part-time holiday leave accrual
For members of staff who aren’t full-time, they can still claim the full 5.6 weeks of holiday with pay.
But this is on a “pro rata” basis. And you’ll need to work out this with the following (simple) sum:
- Work out the number of days the employee works each week.
- Multiply that by 5.6 (to calculate the statutory minimum—this changes if you provide more).
- For example, if it’s four days then it’s 4 x 5.6 = 22.4.
And it’s as simple as that—but do contract us if you need any further help on annual leave.