Average holiday pay
Contents
What is average holiday pay (AHP)?
The principle of ‘average holiday pay’ is that staff should receive holiday pay in respect of all hours they work, to reflect ‘normal’ pay.
Currently, DCC’s casual staff receive holiday pay on all of their hours worked, whereas contracted staff receive holiday pay on their contracted hours with additional hours worked not being included.
We are amending our holiday pay calculations to be in line with the law so that holiday pay is calculated as an average of payments for hours worked over the prior 52 weeks.
How will these changes impact your school?
The changes to calculation and payments of average holiday pay will take effect from 1 April 2023. Eligible contracted staff that are now due holiday pay on additional hours worked will also receive 2 years’ backpay to 1 April 2021.
Please be aware that holiday pay for additional hours/enhancements worked by contracted employees will come at a cost to your school. Budgetary consideration should be given, not only to the potential back-payments due for employees for period 1 April 2021 to 30 September 2023, but the ongoing holiday payments that will be due on additional hours payments such as overtime that your staff might work.
To assist schools in identifying this additional budgetary commitment you will soon receive further, more specific information from the Schools Finance team identifying the cost impact to your school for arrears payments that will be due to your staff
How will this change to AHP affect payments made to employees within your school?
Changes for AHP is dependent on the type of contract an employee is on.These can be split into two groups – contracted staff and casual staff.
Please see guidance below which has been separated by contract type.
For any school employees in receipt of Universal Credit please ensure you read the Universal Credit claimants section.
When will these changes be implemented?
We are currently updating the iTrent system to accommodate these changes to AHP. Depending on the contract type of employees we may need to contact schools directly for information to support the implementation.
We are working to the following timeline:
October 2023 – AHP back-payments made to eligible staff.
October 2023– on-going changes to claims process and management of leave now LIVE in iTrent.
November 2023 onwards – schools of relevant employees will be contacted for additional information.
In the meantime, should you wish to query any of the above, please email payroll-mailbox@devon.gov.uk.
Contracted employees
For contracted staff, the change to pay holiday pay on additional hours worked will take effect from 1 April 2023 with two years’ backpay to 1 April 2021. This will be on top of the holiday pay already factored into salary in respect of contracted hours. We will make payments through the payroll in October 2023.
Term-time only employees
Entitlement to pay and method of calculation
The payment of holiday pay on additional hours will be triggered when an additional hours or enhancement is claimed through iTrent. Once the claim is processed the system will pay an additional holiday enhancement payment based on the hours payments made of 8.33%. This is based on statutory holiday due of 20 days. Please note that long service days for 10, 15, and 20 years are outside of the 20 days so do not attract a payment.
Term-time only employee – example
Kate works as a mealtime assistant in a school. She regularly works overtime and over the past month has earned the following.
| Overtime | Earnings (£) | Hours | Date earned |
|---|---|---|---|
| Overtime at plain time | 25 | 2.5 | 10/07/2023 |
| Overtime at plain time | 15 | 1.5 | 12/07/2023 |
| Overtime at plain time | 30 | 3 | 23/07/2023 |
| Total | 70 | 7 |
Kate will receive additional average holiday payment of £70 x 8.33% = £5.81 itemised on her payslip as average holiday pay.
All year round – support staff
Entitlement to pay and method of calculation
Any holiday booked that is within the 20-days* statutory entitlement for additional pay will now receive a payment for their holiday which not only reflects their normal salary, but an average of any additional payments (for example, overtime or enhancements) received over the preceding 52 weeks.
*These payments will be pro-rated depending on the hours the employee was due to work on the day/s booked as leave.
Payment of holiday pay on additional hours worked will be triggered by the entry of a holiday absence in iTrent.
To ensure that the average holiday pay is paid correctly there will need to be several changes to the way that holiday absence is managed within iTrent for all year-round staff employed in schools – see below.
Additional requirements
Leave will now be booked through iTrent
There will now be a requirement for AYR school employees to book leave through iTrent. As holiday is effectively another type of absence, the way the school enters absence, (either by school administrator or via employee self-service ESS approval) will remain unchanged.
Please note that if leave is not recorded in iTrent moving forward, AHP due on applicable claims cannot be calculated and will not be paid.
Updating historical leave dates (for the period 1 April 2021 to date)
To be able to calculate AHP back pay for those all-year-round employees identified, Payroll must also capture holiday absence history since 1 April 2021. Payroll will contact schools directly providing guidance for recording this information in iTrent.
Updating working patterns (for the period 1 April 2021 to date)
Currently, working patterns are not used for school employees. As all year-round staff working in schools will now be using iTrent to book holiday, there will be a requirement to enter and manage working patterns so that AHP can be calculated correctly when a period of holiday is booked.
Working patterns are currently defaulted to 37 Hours (7.4 hours per day Monday to Friday). Therefore, for all-year-round staff working patterns will need to be changed to employees’ actual weekly working pattern backdated to 01 April 2021.
If an employee has had any changes to their working pattern since 1 April 2021, their working pattern will need to be updated each time with the correct effective date.
Guidance to amending hours and working patterns for school-based all-year-round staff only can be found below:
It is important to note that when payments for average holiday back pay are made there will be some eligible employees that we are not able to pay immediately. This is due to the above information not being held in iTrent.
After initial payments have been made, we will contact those affected to ensure the required data is entered to allow for calculation and payment. Once information is provided, you can expect back payment of holiday pay to be made on the next available pay run.
All-year-round employee – example
Sam works as a Business Manager in a school – Sam works 7.4 hours a day Monday to Friday (37 hours per week). Sam occasionally works overtime and over the past year has earned the following amounts.
| Overtime | Earnings (£) | Hours | Date earned |
|---|---|---|---|
| Overtime at plain time | 45 | 3 | 10/07/2023 |
| Overtime at plain time | 30 | 2 | 06/05/2023 |
| Overtime at plain time | 60 | 4 | 01/12/2022 |
| Total | 135 | 9 |
The average weekly figure for this additional pay is £135 / 52 (weeks) = £2.59.
Therefore, if Sam booked a week of leave (Monday to Friday) within the first 20 days of her entitlement, Sam would see a payment line average holiday pay itemised on her payslip of £2.59. If Sam were to book a single day of leave, she would receive £2.59 x 7.4 / 37 = £0.52.
Teaching staff (including supply teachers)
Teachers and supply teachers are employed under the school teachers’ pay and conditions document, which specifies holiday entitlement and pay rules and are therefore not part of the scope of these changes.
Casual staff
With effect from 1 April 24 the way that casuals are paid holiday pay has changed. This is in accordance with recent government legislation which allows some workers, including casuals, to be paid ‘rolled up holiday pay’- this means that rather than having to claim for payment when holiday is taken, holiday pay can be paid automatically at the same time the hours were worked.
iTrent has been updated to reflect this change so there will be no need to submit holiday claim for these staff with effect from 1 April 24. You must still ensure that workers have adequate rest breaks, but the payment for holiday will be paid automatically at the same time the hours are claimed.
Process for casual staff prior to 1 April 2024
Casual workers already receive holiday pay on all of their hours worked and we will be changing the calculation moving forwards to be in line with the legal requirement.
From our calculations, the requirement to pay an average of payments over the last 52 weeks means that casual staff will receive less holiday pay than they do currently.
Currently, staff receive holiday pay at the hourly rate for their work; the average calculation over the last 52 weeks will result in a lower hourly rate, due to pay award increases over the same period.
Therefore, we will not be adjusting holiday payments previously made to recover overpayments. If any individuals feel that they would have been due more money under the amended method, they can provide details to payroll@devon.gov.uk and we will look at them individually.
Entitlement to AHP and method of calculation
Holiday is currently paid via claim through iTrent. With the introduction of AHP, the process for claiming holiday pay will change.
iTrent will now hold an accrued holiday figure (in hours) for all claims paid from April 2021 at an accrual rate of 12.07%. Any holiday that has already been claimed will then be offset against this accrued figure to show current accrued holiday entitlement.
As part of the claims summary suite of monthly reports sent to school, each school will now receive an additional report that indicates ‘accrued holiday pay entitlement’ (in hours) that can then be claimed via an updated holiday pay claim form*.
This form will now only require the number of hours holiday being claimed (from accrued) entitlement and the date(s). iTrent will then calculate an hourly rate based on last 52-week average, making the additional payment in the next available pay run.
*New claim element is now available on page 5 of the casual claim form ‘Casual Holiday Pay’. Claim requires following details; – number of hours and date claimed.
Additional considerations
Reminder – claim entry
It is important that claims are separated by weeks worked when submitted, for example, if entering a claim at the end of the month, a new claim line is used for hours worked in each new week. This is to ensure accurate calculation of AHP for staff.
Using Claim Type ‘casual claim cash amount’ to claim for holiday pay
Please note, where claim type ‘casual claim cash amount’ has been used to claim holiday pay in the past, iTrent will not be able to calculate accrued average holiday for employees, as no hours worked have been specified against the claim.
Therefore, when entering a holiday claim moving forward, please use the dedicated claim type – ‘Casual Holiday Pay’ element (on page 5 of the Casual claim form). If you have used claim type ‘casual claim cash amount’ historically to claim holiday pay for your staff members, please contact Payroll directly to provide further details.
Casual staff – example
Gillian works as a casual worker at a school. She regularly submits casual claims for payment. Gillian submits the following casual claims for payment.
| Claim | Earnings (£) | Hours | Date earned |
|---|---|---|---|
| Casual claim | 45 | 3 | 06/07/2023 |
| Casual claim | 105 | 7 | 10/07/2023 |
| Casual claim | 90 | 6 | 23/07/2023 |
| Total | 240 | 16 |
Gillian accrues holiday at an average rate of 12.07% as explained above. Therefore, Gillian has accrued 16 x 12.07% = 1.93 hours holiday. The school will receive a monthly report indicating current accrued holiday for staff (in hours).
Gillian then decides to claim some of this holiday. Gillian submits a claim for Holiday pay, specifying only the number of hours that she wishes to claim – in this instance 1.5 hours.
iTrent will then calculate an average hourly rate based on the total of all claims paid or hours worked over the previous 52 weeks.
Gillian will then see casual holiday pay itemised on her payslip showing the 1.5 hours claimed and total amount of holiday payment due.
Variable hours staff
Contracted staff without fixed hours fall under this category. Variable hours staff submit their hours using a variable hours claim form. Annual leave is currently managed outside of iTrent, an additional claim is then made for holiday.
With the introduction of average holiday pay, a new variable hours claim form has been developed which staff will now submit via iTrent. Employees will now enter a claim using claim type ‘Variable Hours Holiday Pay’ specifying the number of hours they wish to claim.
iTrent will then calculate an average holiday pay hourly rate based on total claim payments and hours worked in previous 52 weeks back to 1 April 2021. iTrent will then either pay an average hourly rate, or employee’s normal hourly rate, whichever is higher.
As per casual workers’ changes above we will not be adjusting holiday payments previously made but will make the change for ongoing payments through the payroll.
Variable hours – example
Irene works as a playworker (as part of extended services at a school) – she is on a variable hours contract. Her contracted hourly rate (per position) is £13 per hour. Irene submits a claim for five holiday hours.
iTrent calculates an average hourly based on the total of all claim payments made, against the number of hours worked over a 52-week period. This equates to £12.75 per hour, which is lower than Irene’s contracted hourly rate. Therefore, Irene will see variable hours holiday pay itemised on her payslip at contracted hourly rate of £13 per hour totalling £65.
Universal Credit claimants
For contracted staff in receipt of Universal Credit
If you are due any back pay as a result of the average holiday pay changes, it will mean that your take home pay will be higher in the month in which it is paid. If you are in receipt of Universal Credit (UC) this could have an impact on your payment for the following month as the backpay will be included in this. Please note if you have not claimed additional hours then this will not apply to you.
As UC is based on an individual’s own personal circumstances, we have no way of knowing how employees will be affected. In many cases the back pay will not bring employees over the earnings limit which would reduce the UC – however, households where two DCC employees will both receive back pay could be affected. Information on how your earnings can affect your payments can be found here.
There is also an online benefits calculator found here which you can use to help you find out if you will be affected.
We ask all employees in receipt of UC to check and see if they will be affected. If you are then there is the option of having your average holiday pay back pay staggered over three months so that it does not impact on your UC.
If you wish to take up this option (note this is only for employees in receipt of UC and who have claimed additional hours between 1 April 2021 and the present time) please email payroll@devon.gov.uk with your request stating your name, employee number, job title and place of work. The deadline for this is Monday 9 October 2023. After this time, we will not be able to adjust your pay.
Frequently asked questions
- What does ‘average holiday pay’ mean?
‘Average holiday pay’ describes the principle that when staff take holiday, they should receive pay in respect of all hours they would normally work. This should include additional hours where applicable.
- When do these changes take effect?
The effective date is 1 April 2023, with two years’ backpay to 1 April 2021 for contracted staff employed at this date.
- When will I receive the backpay?
Where due, we will make payments in the October 2023 pay run.
- I left before 1 April 2023 but think I’m due backpay, how can I receive this?
You can request backpay for average holiday pay in the same way as for pay award arrears, by sending your details to Payroll. More information is available on the pay award webpage.
- Can you let me know if I will receive backpay, and how much?
Unfortunately, due to the number of staff affected, we cannot calculate backpay costs in advance for individuals. If you have claimed for additional hours worked on a contracted position and were employed at 1 April 2023 then you will receive backpay as described in this guide.
- I’m a casual worker, why don’t I receive any backpay?
Casual workers already receive holiday pay on all of their hours worked. From our calculations, the requirement to pay an average of payments over the last 52 weeks means that casual staff will receive less holiday pay than they do currently. Currently staff receive holiday pay at the hourly rate for their work; the average calculation over the last 52 weeks will result in a lower hourly rate, due to pay award increases over the same period. Therefore, we will not be adjusting holiday payments previously made to recover overpayments but will make the change for ongoing payments. If any individuals feel that they would have been due more money under the corrected method, they can provide details to payroll@devon.gov.uk and we will look at them individually.
- I’m a teacher or supply teacher, will I see any changes?
No, school teachers’ holiday pay is calculated and paid specifically in line with the School Teachers’ Pay and Conditions Document so are not affected by these changes.
- I work all year round and don’t use iTrent to record my leave or working pattern, will I still receive backpay?
No, we need iTrent to hold your dates of annual leave and your accurate working pattern in order to calculate the payments due. We will be in touch separately with schools to gather this information for affected staff.
- I don’t use iTrent to record my leave or working pattern but I don’t ever work additional hours, do I still need to put this information in iTrent?
If you work term-time only then you don’t need to provide this information. For staff who work all year round then as this change is related to payments of additional hours, if no additional hours are worked then the information doesn’t need to be held in iTrent. However, we encourage all staff’s leave and working patterns to be held in iTrent as described in this guide so that if additional hours are worked in the future, the correct calculation can be done.
- What happens if I’ve been working for less than 52 weeks?
Calculations are usually made from the claims dated in the 52 weeks prior to the annual leave being taken, however, if you have worked less than 52 weeks then the average will be calculated based on the number of weeks that you have worked. This will ensure that it’s still a fair average.
- Will the backpay impact my Universal Credit?
Depending on your own situation, backpay may affect your Universal Credit payment – please refer to the Universal Credit section for further guidance.