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Zero hour contracts & holiday pay.

There are many benefits to a zero hour contract for both employers and employees, the biggest of all being the flexibility it can offer for both parties. For an employer, having members of staff on zero hour contracts means being prepared for a sudden increase in demand, cover for events/larger jobs and staff absence and more available staff for busier periods. An employer is under no obligation to provide zero-hour staff with work, and therefore reduces the risk of paying staff for twiddling their thumbs on the quieter days. Having the additional workforce available when required is also a lot cheaper than paying agency fees each time an extra pair of hands is required.

However on the flip side, just as employers are under no obligation to offer work to staff on zero hour contracts, staff are also under no obligation to accept work, particularly at short notice. Another danger of using workers on a casual basis is that service delivery and quality of work can be affected if measures aren’t taken to ensure that everyone is meeting company standards and that there is consistency with everyone’s work.

According to UK law, staff are entitled to 5.6 weeks paid holiday every year as long as they work 5 days a week. Of course, staff on zero hour contacts aren’t likely to work this many days – in fact, some weeks they may not work at all. Despite this, they are still entitled to holiday pay by law, so how do we calculate this?

The easiest way to calculate holiday pay is as it accrues, meaning that workers can earn holiday by putting the hours in. The statutory holiday entitlement of 5.6 weeks amounts to 12.07% of the total hours worked in a year.

To calculate a zero hours worker’s holiday entitlement, multiply 12.07% by the number of hours they’ve worked. For example:

An employee on a zero hours contract who works 10 hours in a week would get 72.6 minutes of holiday pay. Here’s how you work that out:

12.07 ÷ 100 x 10 = 1.21 hours

If maths isn’t your strongest asset, you can use the holiday entitlement calculator on the GOV website to help.

So to finish calculating an employees holiday pay, multiply their hourly wage by their holiday entitlement. For example:

An employee is eligible for 1 hour and 12 minutes of holiday pay and earns £7.83 per hour (National Living Wage).

Here’s how you work that out:

£7.83 x 1.21 = £9.47

Remember, it is your responsibility as an employer to pay all your staff holiday pay, regardless of the nature of their contact with you. If you don’t, you could be taken to an employment tribunal and end up paying out a lot more!

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