Can anybody work this out? Ref - pay

mattyy · 25 Sep 2014 at 15:26

So I'm leaving my job and I'm working my notice. I had a considerable amount of leave that I had built up but not taken (16.5 Days) it was agreed I would take of a number of these days and have the rest paid to me.

I work mon-friday 37.5 hours a week. What I expected to be paid for the amount of leave I was owed was considerably less and after querying it I was told that the leave was paid to me on a 'day rate' not an 'hourly rate'.

Apparently this day rate is worked out by dividing my salary by 365 days bearing in mind that I only actually work 5 days a week and not weekends (261 days) If I'm booking holiday I also don't book weekends.

So lets say hypothetically I was earning £20 an hour gross. (£39000 per year) I would be expecting for 10 days paid holiday to be ~£1494 (39000/261 = 149.4 * 10)
not the ~£1068 that comes from adjusting the equation to 365 days.

To keep it short - which is the correct way to work out my day rate? 261 or 365?

cheesyboy · 25 Sep 2014 at 15:30

I pay leavers' holiday in lieu based on 260 working days. They're all salaried, though.

If you're paid hourly, then I would expect you to be paid based on hourly rate.

A 365 day basis is total ********, though. As you say, you use holiday to take working days off.

Glaucus · 25 Sep 2014 at 15:32

They're taking the pee.

mattyy · 25 Sep 2014 at 15:34

Oh I am on a salary, working a fixed amount of hours (37.5) for a fixed amount of pay.

Which either way you work it, paying the holiday on an hourly basis or on a day rate based on 261 days a year is the same.

The problem is that my HR department is saying the correct way to work it out is based on 365 days working.

EDIT: So its finding a way to fight this with them now!

cheesyboy · 25 Sep 2014 at 15:35

mattyy said:
Oh I am on a salary, working a fixed amount of hours (37.5) for a fixed amount of pay.

Which either way you work it, paying the holiday on an hourly basis or on a day rate based on 261 days a year is the same.

The problem is that my HR department is saying the correct way to work it out is based on 365 days working.

Well they're ****ing idiots then.

dowie · 25 Sep 2014 at 15:38

book your remaining holiday in your notice period?

or just explain it to them very slowly or ask them to escalate it to someone... speak to your manager about it - flag it up that you're going to be short a few hundred £s because some dumb bint in HR is inumerate

if they still don't budge then I guess a tribunal - though really you don't want to have to do that

mattyy · 25 Sep 2014 at 15:47

dowie said:
book your remaining holiday in your notice period?

or just explain it to them very slowly or ask them to escalate it to someone... speak to your manager about it - flag it up that you're going to be short a few hundred £s because some dumb bint in HR is inumerate

if they still don't budge then I guess a tribunal - though really you don't want to have to do that

I leave in two days so not really an option. My manager has spoken to HR and the same response has been given - Apparentely its paid at a day rate as per my contract, whether it says 261 day or not I don't know until I get home.

Mainly posting just to see I wasnt being bonkers thinking that calculating it on a whole year wasnt right - evan the ACAS site states one week holiday is one week pay.

dowie · 25 Sep 2014 at 15:49

I think you're going to have to persist with it - just see if you can escalate it to someone more competent as it sounds like you're just dealing with a complete mongaloid in the HR/Admin dept.

lsg1r · 25 Sep 2014 at 15:50

you could argue both ways, but it really depends on your contract because you're on a salary rather than hourly rate. With a salary you're getting paid to cover x hours over y days, not so much an hour.

How I understand it is:
If your contract states you only work Mon-Fri then you are right in that your salary is for 5 out of 7 days a week and the 39k is for the 261 days

However if you have a salary where it doesn't state mon-friday only your contract is likely x hours spread over 7 days a week, it's just how you've been scheduled into work your hours Mon-Fri, this doesn't mean you are only working 5 days a week.

This would be HR's method, and as you've found out, it works out in their favour financially.

A perfect example of how a 'salary' can be 'funky' when it comes to holiday pay...
My mum works in a school, she has an hourly rate for her work but the actual total yearly pay is divided into monthly payments because they don't get paid over the school holidays.

cheesyboy · 25 Sep 2014 at 15:50

Would they deduct unauthorised absence on the same basis, I wonder? (they wouldn't)

And do they pay you for sick days at the weekend?

There are many ways to calculate, the way they are doing it isn't one of them. Suspect you'll find they have screwed many people over with this stunt.

cheesyboy · 25 Sep 2014 at 15:53

lsg1r said:
you could argue both ways, but it really depends on your contract because you're on a salary rather than hourly rate. With a salary you're getting paid to cover x hours over y days, not so much an hour.

How I understand it is:
If your contract states you only work Mon-Fri then you are right in that your salary is for 5 out of 7 days a week and the 39k is for the 261 days

However if you have a salary where it doesn't state mon-friday only your contract is likely x hours spread over 7 days a week, it's just how you've been scheduled into work your hours Mon-Fri, this doesn't mean you are only working 5 days a week.

This would be HR's method, and as you've found out, it works out in their favour financially.

My mum works in a school, she has an hourly rate for her work but the actually yearly pay is divided into monthly payments because they don't get paid over the school holidays.

If they work on an hours/year basis, then they need to use holiday as being 1 day = 7.5 hours and work it out from there (since 7.5 hours is how holiday has been treated during the employment). They can't now say that one day holiday is worth 5.35 hours (37.5 hours divided by 7 days).

So you start with 1,950 hours for the year and then take 10 days holiday as 75 hours and apply that fraction.

lsg1r · 25 Sep 2014 at 15:57

cheesyboy said:
If they work on an hours/year basis, then they need to use holiday as being 1 day = 7.5 hours and work it out from there (since 7.5 hours is how holiday has been treated during the employment). They can't now say that one day holiday is worth 5.35 hours (37.5 hours divided by 7 days).

So you start with 1,950 hours for the year and then take 10 days holiday as 75 hours and apply that fraction.

like I said it depends on the contract which way is 'correct', I suspect the contract is likely the later where they save money.

cheesyboy · 25 Sep 2014 at 16:00

BTW, unless there was compulsion in your contract, they aren't able to coerce you into taking holiday before leaving. You have a right to opt to be paid it.

mattyy · 25 Sep 2014 at 16:04

From ACAS

Workers with normal working hours
• If a worker’s pay does not vary with the amount of work done then a week’s pay is the amount due for a week’s work under the worker’s contract. Pay for non-contractual overtime is excluded.
• If a worker’s pay varies with the amount of work done then the amount of a week’s pay is the pay for the normal weekly working hours multiplied by the workers average hourly rate over the preceding 12 weeks. This may occur under a piece work, bonus or commission system.
To calculate the average hourly rate, only hours where the worker was
working, and the pay related to them, should be taken into account.
Overtime hours can be included although pay for these hours should be
adjusted to the normal rate. Any week in which no pay was due, for hours
worked, should be replaced by the last previous week in which pay was
received for hours worked.
• Shift and rota workers, whose pay varies because they work their
normal hours at varying times and in varying amounts in different weeks,
have their week’s pay calculated differently. Their average weekly hours of
work, in the preceding 12 weeks, are multiplied by their average hourly
rate. The hourly rate is calculated as above and includes any shift
allowance which is payable.

Workers with no normal working hours:
• If a worker has no normal working hours then a week’s pay is the average
pay received over the preceding 12 weeks. Any week for which no pay was
due should be replaced by the last previous week for which pay was due.

I do not do shifts so the only one that applies to me is the first - as said one weeks pay for one weeks holiday. Even if the very last applied to me, which I think is being implied, I have worked the same hours and days for the last 5 years so it would work out the same.

Greboth · 25 Sep 2014 at 16:06

The way to calculate a weeks pay is 7/365th, rather than using working days because each year varies between 260 - 262 working days. So I wonder if someone in HR has misunderstood this and taken it to how to work out a days pay. As far as I am aware, the way to work out a days pay is:
Annual / 365 *7 / Number of days worked per week.

So for you, £39k is £149.59 a day (well £149.58904 but rounding up is better for you

)

mattyy · 25 Sep 2014 at 16:12

Greboth said:
The way to calculate a weeks pay is 7/365th, rather than using working days because each year varies between 260 - 262 working days. So I wonder if someone in HR has misunderstood this and taken it to how to work out a days pay. As far as I am aware, the way to work out a days pay is:
Annual / 365 *7 / Number of days worked per week.

So for you, £39k is £149.59 a day (well £149.58904 but rounding up is better for you )

Yeah I wish that was my rate!!

I think its conclusive that they are being arses about it, will check my contract tonight and update

stopper · 25 Sep 2014 at 16:17

mattyy said:
To keep it short - which is the correct way to work out my day rate? 261 or 365?

Salary is a fixed amount over 1 full year, paid in installments.
They are right using 365, unfortunately.

Surveyor · 25 Sep 2014 at 17:09

Deductions from wages, calculation of rate of pay

In Taylor v East Midlands Offenders Employment Consortium [2000] IRLR 760 the Employment Appeal Tribunal decided that the correct way of calculating holiday pay due to an applicant on termination of employment where 10 days holiday was owed is to divide gross annual salary by 365 to give a day's pay and then to multiply that by 14.

The situation may have changed due to subsequent legislation or case law.

cheesyboy · 25 Sep 2014 at 17:12

Surveyor said:
Deductions from wages, calculation of rate of pay

In Taylor v East Midlands Offenders Employment Consortium [2000] IRLR 760 the Employment Appeal Tribunal decided that the correct way of calculating holiday pay due to an applicant on termination of employment where 10 days holiday was owed is to divide gross annual salary by 365 to give a day's pay and then to multiply that by 14.

The situation may have changed due to subsequent legislation or case law.

What you've written contradicts what you have linked to in quite an important way. From the link;

"What I can say with some certainty is that the way that the department has calculated the rate of pay is not correct. The department appear to have simply divided Mr X's annual salary by 365. Recent decisions of the EAT have decided that where, for example, an individual is working a five day week, the annual salary must be divided by 365, and then multiplied by seven-fifths, to arrive at a daily rate for the days actually worked. (See Taylor v The East Midlands Offender Employment Consortium (2000) IRLR 760).

Freakbro · 25 Sep 2014 at 17:14

Surveyor said:
Deductions from wages, calculation of rate of pay

In Taylor v East Midlands Offenders Employment Consortium [2000] IRLR 760 the Employment Appeal Tribunal decided that the correct way of calculating holiday pay due to an applicant on termination of employment where 10 days holiday was owed is to divide gross annual salary by 365 to give a day's pay and then to multiply that by 14.

The situation may have changed due to subsequent legislation or case law.

Basically that is saying the same as what everyone else is saying....you base holiday pay on days worked per week, not the full 7 days of the week.

OP, the company do not have a leg to stand on, your holiday entitlement is based on your daily rate of pay. Your daily rate of pay is your salary / the number of days you work, not 365....that is just laughable!