Essential Rules for Managing Staff Holidays

Getting Holidays Right: What Every Salon Manager Needs to Know!

Staff holidays. They sound simple enough… until you’re knee-deep in calendars, lost applications, upset employees and pay queries. From figuring out entitlements to calculating holiday pay on variable hours and commissions, it’s one of the easiest areas to get wrong. And unfortunately, one of the costliest when it comes to compliance.

Days or Hours – Which Should You Use?

First, how should you track holiday, in days or hours? That depends entirely on how your team works:

  • Fixed-length shifts? Managing holidays in days usually works well.
  • Hourly pay or variable shift lengths? Managing holidays in hours is far more accurate and fairer.

Tip: Match your tracking method to how your team actually works. It’ll save you endless confusion down the line.

How to Calculate Holiday Entitlement

Once you’ve decided how to track leave, you need to know how much each person is entitled to. 

The UK’s statutory minimum is 5.6 weeks of paid holiday per year. Here’s how that translates:

  • 5 days per week × 5.6 = 28 days
  • 40 hours per week × 5.6 = 224 hours

If your team works irregular hours, entitlements must reflect actual time worked. No set hours in their contract? Use the average from the last 52 paid weeks (excluding weeks with no pay), then multiply that average week by 5.6 to get their annual allowance.

Overtime – Does It Affect Holiday Entitlement?

It might. Here’s the breakdown:

  • One-off or occasional overtime? No adjustment needed.
  • Regular paid overtime? Yes – it must be included in their holiday entitlement.
  • TOIL (Time Off In Lieu)? No extra holiday is required.

Loop HR makes this easy with a simple toggle in each employee profile. Switch it on and we’ll calculate and allocate the extra entitlement automatically.

Should You Include Commission and Bonuses in Holiday Pay?

Yes – and this is where many salons get caught out.

By law, holiday pay must reflect what an employee normally earns. That includes:

  • Basic pay
  • Regular overtime
  • Commission and bonuses

You’re required to calculate the average earnings over the last 52 paid weeks. That’s the rate that must be paid during statutory holidays.

Can You Pay Less for Bank Holidays?

No – not if those bank holidays are part of the employee’s statutory 5.6 weeks.

All statutory holiday must be paid at the employee’s 52-week average rate. You only have flexibility if you’re offering additional leave beyond the minimum and even then, reducing the rate carries legal risk.

In most cases, it’s just not worth the hassle.

 

What About Starters and Leavers?

For new starters:

You’ll need to pro-rate their allowance from their start date to the end of your holiday year. Make sure they know both their full-year entitlement and their pro-rata amount.

For leavers:

  • Calculate their entitlement from the start of the year (or their start date) to their final day.
  • Deduct any holiday they’ve already taken.
  • Pay for any unused holiday at their 52-week average rate.
  • If they’ve taken too much, you can reclaim the overpayment – but only if it’s stated in their contract.

Loop HR takes care of this automatically and includes everything in the final payroll summary.

 

What Does Good Holiday Management Look Like?

Here's what we recommend:

  • Always calculate 5.6 weeks as the minimum entitlement
  • Use the 52-week average for all statutory holiday pay
  • Avoid underpaying for bank holidays
  • Have a clear and accessible holiday policy
  • Give your team live access to their holiday calendar
  • Let employees view their allowance and request time off easily
  • Use a system that updates everything in real time

Final Thoughts

For your team, holidays are easy to understand and transparent.
For you, everything, from starters and leavers to commission-based pay and legal compliance, is handled automatically.

Everything is tracked, calculated, and reported clearly, giving you and your team complete peace of mind.

If you’d like to see how Loop HR works in your business, feel free to book a call and I’ll show you around. Use this link to book.

Ian Egerton

Founder, Loop HR