Does Pro Rata holiday for new starters get you stuck?

March 12, 2020

Pro rata holiday is the amount of leave a new starter is entitled to when they join the company mid-way through the holiday year. How much do they get, and how do you work it out?

The basics

Every worker you employ has the right to paid time off work. How much this amounts to will be set out in their contract, but in most countries, the minimum entitlement is also set out in the law, for the UK this is 5.6 weeks, 28 days for a full-time employee. You are entitled to set the rules for your business to say when your holiday year for that allowance will run. Many firms simply use the calendar year, but there may be other dates that make sense for you, such as a date set around a seasonal sales pattern.

The complications

New starters can complicate your annual leave arrangements since they rarely join the company exactly at the start of your holiday year. When somebody starts working for you mid-year they are, of course, still entitled to take holiday during that first year, but not the full allowance. Instead, you need to work out how much leave they get pro rata, which is based on how much of the holiday year they will be working.

To work out the pro rata annual leave entitlement for a new employee, you first need to know the full-year allowance under your policy, the end date of your holiday year, and the start date of the worker. You can then perform a calculation to find the correct number.

Example Ltd gives its full time staff 30 days paid holiday each year, with the firm’s holiday year running from 1 January to 31 December. Alice is starting work at Example as a full time employee on 1 March. This means that Alice will work 9 months of the holiday year, therefore she is entitled to 9/12 of the yearly holiday allowance, or 22.5 days, in the year to 31 December.

When you do a pro-rata calculation you should remember that the rules for leave entitlement in the UK mean that you should round up any entitlement to the nearest full day. For example, if an employee would get 11.62 days on a pro-rata calculation then they are entitled to 12 days of leave.

Don’t get too far ahead

An additional rule for employees in their first year at the company is that, during the first year only, you are allowed to insist that they only take leave that has been accrued. That is to say that they can’t take a paid holiday until they have worked enough days to “earn” it.

In the example above, with 30 days a year entitlement, each month Alice works she would accrue 2.5 days of leave. This means that she would not be able to take a 5-day holiday until after 1 May. If you are going to apply this rule it is vital that you clearly state this in your annual leave policy, and communicate it to new starters. You should also, as always, make sure that you apply the rule to all new starters so that you do not seem to be favouring or picking on any individual.

Take away the stress

For many managers working out pro-rata holiday for new starters is a hassle they could do without, distracting them from other important tasks. The best way to avoid this stress is to use a purpose-built annual leave management system.

LeaveWizard’s fully customisable online platform can automatically handle pro rata calculations, as well as many more of the complexities of leave management. The simple-to-use interfaces, as well as employee and manager-facing apps, make it simple and easy to manage holidays across a company of any size.

See for yourself how LeaveWizard can take the stress out of annual leave by booking your free online demo here.

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