What is the holiday entitlement?
The holiday entitlement represents the number of paid leave days an employee is entitled to have in a year. The holiday entitlement varies from country to country and from company to company. The basic holiday entitlement is established by law and represents the minimum number of leave days per year an employee can take. You're enforced by labor legislation to allow employees to take this paid time-off.
However, the company can add different paid time-offs, such as sick days, professional development, or special holidays. Employees can also negotiate a higher number of leave days at employment. The number of leave days may increase gradually, based on the number of years spent working for the company. Public holidays aren't included in the holiday entitlement.
How to calculate holiday entitlement for employees
The law establishes a fixed number of leave days per year. However, you have to add the number of leave days granted by the company's leave policy and calculate the holiday entitlement per year for each employee. You also have to consider each employee's work schedule, hiring contract, and employment period. Here is the information you have to consider:
- The holiday entitlement stated by labor legislation in the country where the employee works
- Additional leave days negotiated at hiring
- Other leave days due to the company's leave policy
- The type of employment (full-time or partial)
- The starting date of the employment contract
- The ending date of the employment contract in case of temporary hiring
You need to compute the annual leave based on the basic holiday entitlement, individual work contract, and continuous employment with the company. The minimum number of annual leave days is the number of days stipulated by labor legislation. To this, you add extra days, negotiated, or earned in time.
Then divide the annual leave by the number of working days a week. For example, if your company has the usual working week of 5 days, you'll divide the annual leave by 5 and get the number of leave weeks an employee is entitled to take.
All you have to do now is multiply the number of leave weeks with the number of days a week the employee is going to work. For example, employees who work just 3 days a week instead of 5 will have a smaller holiday entitlement.
This formula works for employees who work the entire year. However, an employee may start working in the middle of the year, and therefore he or she will have a smaller holiday entitlement for the first year. You may also have employees hired for a limited period of time. For these situations, you need to consider the starting and ending date of employment. Calculate the holiday entitlement per day (divide the annual leave to 365 or 366 for a leap year) and then multiply the result with the number of days the employee works.
If an employee works part-time but comes to work for the same amount of hours each day, the formula from above still applies. Even if the employee stays fewer hours at work, she or he works in all working days. However, if an employee is paid by the hour and works a different number of hours each day, you have to calculate the holiday entitlement by the hour and then multiply it with the number of worked hours.
Use a template for calculating holiday entitlement
It would be best if you didn't calculate by hand the holiday entitlement for each employee. Create a template that covers all the situations you have and use it for all employees. You may use an Excel file or a dedicated HR software. You may also integrate the holiday entitlement with the leave management system and payroll. A holiday entitlement template will help you avoid mistakes and provide a cohesive system for current and future employees. Download here an Excel holiday entitlement template.
Download the Holiday entitlement template