Is the cost of extra annual leave being calculated correctly?

wendb69

Good afternoon wonder if you can help.

I have asked my employer if I can take 10 extra days leave a year unpaid.

My salary is £37,400 and they have calculated on my 5 day week that I work as 260 days a year.

However, the payroll department have calculated the cost of the 10 extra days as follows:

£37,400 260 days
Minus 22 days holiday I currently get
Minus 8 days bank holidays 

= 230 days.

They've then said that therefore, the cost of taking extra holiday is calculated as follows:

£37,400 div by 230 days.

This doesn't sound right to me.  Surely it should be calculated at 260 days, otherwise, I am paying more to take annual leave when my paid holiday is removed?

TheSpiddalKid

This is from another similar threat recently. 

TheSpiddalKid said:

The legal default for a day's pay is to use 1/365th, this is set out in the Apportionments act. A case related to it was in the Supreme Court a few years ago, it related to the deduction of a day's pay owing to strike action and how the deduction should be calculated.

https://www.hcrlaw.com/blog/calculating-deductions-salary-response-strike-action-supreme-court-provides-clarification/

Other methods can be used but the method of calculation should (heavy emphasis on should) be part of a contract or agreement.

In reality, it is often not but is based on custom and practice. 

MacMickster

Your employer is paying you to actually attend work 230 times per year. If you want an extra 10 days off then of course it is going to cost you 10/230 of your salary.

Think about how much they should charge you if you wanted to buy 230 extra days holiday.

Jaybee_16

Your daily pay rate is salary divided by 260 if that's the calculation they use, multiplied by 10 days.

JGB1955

MacMickster said:

Your employer is paying you to actually attend work 230 times per year. If you want an extra 10 days off then of course it is going to cost you 10/230 of your salary.

Think about how much they should charge you if you wanted to buy 230 extra days holiday.

I'm not sure you're right - AIUI the employer is paying  for 260 days a year, some of which are taken as paid holidays.  Any extra day equates to a 'penalty' of 1/260th.

El_Torro

TheSpiddalKid said:

This is from another similar threat recently. 

TheSpiddalKid said:

The legal default for a day's pay is to use 1/365th, this is set out in the Apportionments act. A case related to it was in the Supreme Court a few years ago, it related to the deduction of a day's pay owing to strike action and how the deduction should be calculated.

https://www.hcrlaw.com/blog/calculating-deductions-salary-response-strike-action-supreme-court-provides-clarification/

Other methods can be used but the method of calculation should (heavy emphasis on should) be part of a contract or agreement.

In reality, it is often not but is based on custom and practice. 

Interesting decision. However this is in relation to people going on strike, so don't think it's very relevant to the OP's situation. 

Ultimately if you want to buy more holiday this comes down to a negotiation between you and your employer. They can either flat out refuse or, as in this case, give you a less than generous offer. If you were to take a month's holiday all in one go (assuming your employer allows you to take such a big chunk in one go) then they would still pay you for that month, as they are legally obliged to do. Therefore I think the calculation should be divided by 260, not 230. 

As long as your employer is paying you at least minimum wage they can make whatever offer they want to sell you more holiday, which you either accept or reject. Just depends how much value you put on those extra 10 days.

Brie

bank holidays and standard holidays are part of your normal entitlement and therefore have nothing to do with the extra days you want to take unpaid.  Working a 35 hour week equates to 1820 hours per year.  You could calculate your hourly wage as £37500/1820= £20.60 an hour.  So 10 x 7 hour days = 1442.31.  Maybe that will help them in payroll?

theoretica

JGB1955 said:

MacMickster said:

Your employer is paying you to actually attend work 230 times per year. If you want an extra 10 days off then of course it is going to cost you 10/230 of your salary.

Think about how much they should charge you if you wanted to buy 230 extra days holiday.

I'm not sure you're right - AIUI the employer is paying  for 260 days a year, some of which are taken as paid holidays.  Any extra day equates to a 'penalty' of 1/260th.

If you think of taking any large proportion of the year as unpaid extra holiday then it makes sense to me that the paid holiday also decreases as it has not been earned in full through days worked.  I can see no reason why negotiating to go half time for a year (which would halve holiday time) and negotiating 115 unpaid days off should give different end results.  So more than 1/260th of the pay needs to be reduced to cover both the extra day off and a small portion of the paid holiday.

TheSpiddalKid

El_Torro said:

TheSpiddalKid said:

This is from another similar threat recently. 

TheSpiddalKid said:

The legal default for a day's pay is to use 1/365th, this is set out in the Apportionments act. A case related to it was in the Supreme Court a few years ago, it related to the deduction of a day's pay owing to strike action and how the deduction should be calculated.

https://www.hcrlaw.com/blog/calculating-deductions-salary-response-strike-action-supreme-court-provides-clarification/

Other methods can be used but the method of calculation should (heavy emphasis on should) be part of a contract or agreement.

In reality, it is often not but is based on custom and practice. 

Interesting decision. However this is in relation to people going on strike, so don't think it's very relevant to the OP's situation.

Differentiating circumstances are immaterial; the legal question is simple: what calculation should be used when making a deduction from salary? The Appointments Act outlines.
:
All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made payable under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly...The word “annuities” includes salaries and pensions 

That to me is fairly clear that unless there is an agreement to the alternative annual salaries are apportioned on a day-by-day basis, or 1/365th

Undervalued

Surely the point here is that the OP is, in effect, becoming part time - albeit in an unusual way. They are no longer working the full year but ten days less than a full year. So there is less time in which to accrue paid holiday. So, unless their paid annual leave entitlement is reduced to reflect this their salary has to be reduced to do so.

Very roughly statutory holiday amounts to one day for every two weeks (i.e 10 days) worked. So as they will be working ten days less (unpaid) the employer would be out of pocket by roughly one day's holiday pay.

So, either they should get one day's less paid annual leave and their annual salary should drop by 10 days pay, or keep the same annual leave and their salary drop by 11 days pay in total (10 days unpaid leave + 1 day to adjust for holiday pay). 

r6mile

My employer (Civil Service) calculates the rate for extra 'annual leave' - which we could buy a week's worth this year as part of a one-off offer - at 1/260 of annual salary per day.

But for some reason, unpaid leave (such as unpaid parental leave) is deducted at 1/365 of annual salary.

Is that normal?