How to calculate carer holiday accrual and absence pay

Calculating carer holiday accrual is a necessary part of managing payroll in your home care agency, but it can be complicated, particularly if you employ hundreds of carers. 

Working out carers allowance holiday entitlement can be time-consuming, difficult, and often frustrating - but you have a legal obligation to get it right.

In this article, we’ll discuss exactly how to calculate holiday accrual and pay rates and introduce a clever software solution that does the job for you.

How to calculate carer holiday accrual

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As soon as a carer starts work, their holiday accrual starts to build. It is the responsibility of home care managers to correctly calculate carers’ holiday entitlement, make sure they can take their allocated holidays and get paid for them correctly.

Because home care agencies have employees on different contracts working various shift patterns, calculating holiday entitlement becomes complicated, especially when you have multiple carers on part time hours with pro-rata leave entitlement.

You can use online tools to calculate an employee’s holiday entitlement (gov.uk has a good one here), but you still need to understand the calculations behind it. 

As a guide:

• When your carer takes up the post, inform them of your company leave year dates - the dates within which they must take their leave. Some home care providers work from 1st January to 31st December, while others might follow the April to March tax year, for example.

• Be clear on the annual holiday allowance your company gives to a full time employee. The statutory holiday entitlement is 28 days (5.6 weeks) per year for full-time workers, so you must allow that as a minimum. Some home care agencies offer additional paid holiday allowance on top of statutory leave.

• For part time carers, you’ll need to work out their pro rata holiday entitlement. For example, if full time carers have 28 days leave per year (2.33 days a month), a carer on 0.5FTE is entitled to 14 days leave per year (1.16 days a month).

• To work out the holiday entitlement of a new starter, divide the annual leave entitlement by 12 to get the monthly leave allowance, then multiply it by how many months they have left in the leave year. For example, if your year runs from January to December and a new carer starts on 1st March, they have ten months of holiday entitlement for that year.

How to calculate carer holiday pay

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Once you’ve worked out how much holiday leave a carer is entitled to, you must calculate how much to pay them for their leave. As social care involves round-the-clock shift work and unsociable hours and usually offers both basic and enhanced pay rates, the sums can become rather complicated.

To calculate the holiday pay for a carer who works a set number of hours each week over shifts with more than one pay rate, you’ll need to work out their average hourly pay over the past 52 weeks. 

Example:
Lisa works 40 hours per week at a basic rate of £9.30 per hour and an enhanced rate of £13.95 for weekend shifts.
Her full time basic weekly pay is £372, which totals £19,344 per year (weekly pay x 52). 
However, over the last 52 weeks, Lisa worked 10 weekends, so her actual yearly pay was £20,088. 
To work out her holiday pay, divide £20,088 by 52 weeks to give an average weekly pay of £386.30. Divide this by 40 to give an average hourly rate of £9.65 per hour.
Lisa should receive holiday pay at a rate of £9.65 per hour.

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Carers on irregular hours or zero-hours contracts

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All employees are entitled to holiday leave, no matter how many, or few hours they work. If a carer works irregular hours or is on a zero-hours contract, calculate their holidays per hour worked, then determine their holiday pay rate by working out their average hourly rate over the last 52 weeks.

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Example:
Michael is on a flexible contract working different hours each week. Over the last 52 weeks, he has worked 520 hours, which is an average of 10 hours per week. 
As this is 0.25FTE (Full-Time-Equivalent) , he is entitled to 0.25 of holiday leave, which works out at 7 days (56 hours) per year.
Michael is paid £9.72 an hour, with unsociable hours paid at an enhanced rate of £14.58 an hour. He earned £5248.80 for the 520 hours he worked over the past 52 weeks, giving an average hourly rate of £10.09.
Therefore, Michael’s holiday pay rate is £10.09 per hour.

Is there an easier way to calculate carer holiday accrual and pay?

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Birdie's technology has been designed to take the pain out of your more manual processes. As part of that commitment, we're exploring how to simplify holiday pay calculations - keep an eye on roadmap.birdie.care for more!

Want to know more about how Birdie can help you streamline processes, meet CQC requirements and deliver extraordinary care? Book a free demo.