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How to calculate and work out accrued vacation, holiday or annual leave

To calculate accrued vacation, you need to divide the annual holiday allowance by 12 to get a monthly figure, then multiply by the number of months worked.

Accruing means “building up”. When employees accrue vacation (holiday), it means that their holiday entitlement builds up in proportion to the amount of time they’ve been employed. The accrual system works out how much holiday an employee can take if they work for an employer for part of the holiday year.

Joining or leaving part-way through the year

Here’s the principle. If an employee starts work part-way through your holiday year, they will accrue (build up) one twelfth of their vacation in each month they work. So, after working for you for two months, they would get one sixth of the total annual entitlement. After six months, they would’ve accrued half of it. The accrual system makes the holiday calculation fair for both the employee and employer. Employees can’t take their full annual entitlement in the first months of their employment and then leave. But they can take increasing amounts of holiday as their tenure increases or save them up to use later in the year.

If an employee leaves part way through the holiday year, the same method applies. They are entitled to the same proportion of their holiday as the months they’ve worked in that holiday year. If they leave with accrued holiday in hand, their employer must pay them for it. If they’ve taken too much, the employer can reclaim the value from their final wage packet.

How to work it out

In the UK, to calculate accrued holiday you must include public holidays. The minimum statutory holiday allowance is 28 days (20 days plus 8 UK bank holidays.) Divide the total annual holiday days by 12, to get a monthly figure. Then multiply by the number of months worked. Round the figure up to get complete days or half days. You can’t round it down.

There’s a useful calculator on the government’s website, which you can find here.

Using an HR system to work it out

Modern HR teams don’t have to work it out manually. Many use HR management systems to cut manual admin, save time and improve accuracy. For example, Sage People’s attendance and leave management functionality offers a flexible framework for defining your absence management processes across multiple geographies. Absence, vacation, and paid time-off (PTO) options can be created to determine how employees accrue or are granted time off automatically. Each group of settings, called an ‘Absence Accrual Pattern’, uses rules to define parameters for accruals and limits for each type of absence recorded in your organization.

After employees are enrolled in a plan, using predefined policy settings, they can submit time-off requests for approval by managers. The system calculates accruals based on the rules you’ve setup. Policy linking enables absence management to be tailored to country, region, or other organizational grouping of your choosing. With this kind of record, managers, People teams and Human Resources (HR) can see who is taking time off and how much time off each employee has left.

How to calculate/work out accrued vacation/holiday/annual leave

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