How best to manage staff holidays
When it comes to managing staff holidays, should you use days or hours?
How best to manage Staff Holidays: Days or Hours
When it comes to managing staff holidays, should you use days or hours?
This question is often overlooked, but it’s a crucial consideration for cost management, time efficiency, and compliance. Getting it wrong could lead to unnecessary expenses and complications.
At Loop HR, we ask this question during our client induction process. Most prefer using days because "it's easier for staff to understand." While this may seem straightforward, is it the best choice for your business? And after explaining the pros and cons, 90% go with hours, here’s why!
Common problems around holiday management!
A common problem arises when employees are paid by the hour, but their holiday allowance is in days! This disconnect forces employers to spend time calculating holiday hours for payroll, but holidays are recorded as days. The critical question then is: are you paying an average day rate or for the actual hours someone is on holiday?
Plus, with variable working patterns it can be challenging to calculate the true allowance. With Loop HR you can pro-rata allowances based on a range of criteria.
Below is a simple guide to decide whether holiday days or holiday hours are best for your business.
Managing Holidays in Days
If your employees work the same hours each day (e.g., 8 hours), managing holidays in days is straightforward. Each workday has the same value, making holiday days easy to calculate.
- Pros: Easy to count days or half-days; ideal for employees working the same hours every day, each week.
- Cons: Lack of flexibility around partial days off; difficult to allocate precise leave for variable work patterns. For example, when an employee works different hours each day or has bi-weekly shifts with variable hours, calculating holiday in days allowance is cumbersome.
Managing Holidays in Hours
If your team works variable shifts, managing holidays in hours is more effective. It’s also logical if you pay staff by the hour.
- Pros: Flexibility in leave; accurate holiday pay regardless of shift length. Ideal for bi-weekly or four-weekly variable shifts.
- Cons: Perceived complexity; manual tracking can be cumbersome. However, using software like Loop HR simplifies this process, integrating allowances, schedules, and payroll seamlessly.
Things to consider when managing holidays!
UK Government Holiday Allowances
In the UK, the legal minimum holiday requirement is 5.6 weeks, including bank and public holidays. For a full-time worker, this translates to 28 days (5 days per week x 5.6 weeks = 28 days).
For variable work patterns:
Calculate the average workweek (e.g., 3.5 days per week).
Apply the formula: average days per week x 5.6 weeks = total holiday days.
For hours:
Calculate the average weekly hours (e.g., 29.5 hours).
Apply the formula: average weekly hours x 5.6 weeks = total holiday hours.
Conclusion: most salons offer variable work patterns, meaning most salons would benefit from hourly holiday management.
Choosing the Best Holiday Cycle
In my experience, the best holiday cycles are either a calendar year (1 Jan to 31 Dec) or a fiscal year (1 April to 31 March). Starting cycles on the business anniversary can confuse staff over time, and using employee start dates for holiday cycles can be most stressful.
Loop HR allows you to set a uniform holiday year start date from anytime, for all employees.
Managing Accrued Holiday from Overtime
UK law mandates that employees regularly working overtime accrue holiday from those hours. Loop HR can automate this process, with options for manual adjustments. For more on accrued overtime holidays, visit our knowledge base or book a Loop HR discovery call and see how we manage holidays.
Calculating Holiday Commission
Another big question we asked is how to calculate holiday commission. In the UK the answer is simple: you pay an average of hourly rate for the past 52 weeks. Loop HR will automatically calculate this figure for you as part of the payroll process.
If you want to learn more about how Loop HR can streamline your HR and salon management processes, book a discovery call using the link below.
In conclusion, managing employee holidays is more than just counting days. We help you manage every aspect of employee holidays from calculating allowances to variable pay rates and final holiday pay at termination.
For more information on salon management and ways to simplify HR tasks, chat with us, we can help you streamline the tasks that make running your salon or spa business easier and more efficient! Book a discovery call.
Ian Egerton, founder of Loop HR
