IRIS holiday pay module for Earnie IQ

In 2014 two employment tribunals, Fulton v Bear Scotland and Lock v British Gas, resulted in two new rulings regarding the calculation of holiday pay. They stated that overtime and commission should be included in the holiday pay calculation.

There are a few things to consider:

• There is no clear definition of how to calculate the payments, other than an average of 52 weeks.

• What constitutes a day or an hour’s holiday pay.

• How holiday is calculated for monthly-paid individuals.

• Whether the whole pay period be excluded from the calculation if a statutory payment is included.

The IRIS Holiday Pay Module provides a flexible solution, allowing you to define how the payment should be calculated.

The IRIS Holiday Pay Module will be updated in line with any changes to the law allowing your business to remain compliant.

The steps you need to follow when setting up the IRIS Holiday Pay module are as follows:

Terms

Enhanced Holiday Rate – the holiday rate calculated using the IRIS Holiday Pay module.

Contractual Rate – a standard rate of holiday pay not using the enhanced rate calculation.

Regulation 13 Leave – the statutory entitlement of 4 weeks’ leave.

Additional Leave – the extra 1.6 weeks leave UK employees are given for bank holidays.

Contractual Leave – anything above the statutory leave.

Guaranteed Overtime – overtime the employer is obliged to offer and pay, and the employee is obliged to work.

Non-guaranteed Overtime – overtime the employer is not obliged to offer and pay, but the employee is obliged to work if it is offered.

Voluntary Overtime – overtime the employer is not obliged to offer or pay and, if offered, the employee is free to decline.

Regular Hours – used when an employee works the same fixed hours each pay period.

Irregular Hours – used when an employee works different hours or shifts each pay period.

Offset Basic from Holiday Pay – This indicator is used specifically for employees where separate holiday pay isn’t paid but you need to pay the extra enhanced rate. For example, a sales employee when taking holiday is just paid a salary as normal, however as they usually earn commission this needs to be included in the AWE to calculate the enhanced rate holiday. If you tick this box, the payroll software will calculate what the normal holiday would have been and only pay the extra amount.

AWE – Average Weekly Earnings.