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Part 3 of 7 · Holiday accrual tracker series ~5 min read

Accruing holiday on irregular hours: where 12.07% comes from

This is the arithmetic, and it is genuinely small. What makes it worth a post is that three of the four inputs are things businesses routinely get from the wrong system, and each wrong input fails silently in the same direction.

Key takeaways

  • 12.07% is 5.6 weeks divided by the 46.4 weeks that are left once you remove them.
  • Accrue on hours worked, not hours rostered. A cancelled shift accrues nothing.
  • Protected absence still accrues, at an average of the previous 52 paid weeks.
  • Round up, to the nearest part-hour. Never round down.
  • One ledger line per worker per period, written once and never edited.

One pay period, one ledger line

A pay period turned into one line of accrued entitlementA vertical chain inside an AWS account container, entered from a box on the left labelled A pay period, closed with hours attached. Read hours worked takes them from the timesheet rather than the rota, with a side exit reading missing: Hold, because no timesheet means no accrual yet. Add covered absence brings in sick and family leave at the fifty-two week average. Apply the rate uses twelve point zero seven per cent or the contractual rate. Round upward goes to the nearest part-hour. Write the line appends it with its inputs. A note says the second step is the one everybody omits, because a worker on maternity leave or long-term sick keeps accruing and zero hours worked does not mean zero accrued.AWS ACCOUNTA pay periodclosed, with hoursattachedRead hours workedfrom the timesheet,not the rotaHoldno timesheet meansno accrual yetmissingAdd covered absencesick and family leave,at the 52-week averageApply the rate12.07%, or thecontractual rateRound upwardto the nearestpart-hourWrite the lineappend-only, withits inputsThe second step is the one everybody omits. A worker on maternity leave or long-term sick keeps accruing, and zero hours worked does not mean zero accrued.
Fig 1. Five steps and one hold. Nothing here is difficult; the value is that it runs every period without anybody remembering to do it.
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Where the number comes from

A year has 52 weeks. The statutory minimum is 5.6 weeks of paid leave. If you take those 5.6 weeks out, 46.4 weeks are left, and those are the weeks in which the worker is actually at work earning the leave. Divide 5.6 by 46.4 and you get 0.1207, which is where 12.07 per cent comes from.

It is worth saying plainly because it is often presented as a rule of thumb or a generosity, and it is neither. It is the identical entitlement everybody else gets, expressed as a rate so that it can be applied to hours instead of to days. A worker who accrues at 12.07 per cent over a full year of ordinary hours ends up with exactly 5.6 weeks.

If the contract is more generous than the statutory minimum, the rate goes up correspondingly and the system stores the rate per worker rather than as a constant. This costs nothing and it is the difference between a system that can handle the one long-serving manager on 30 days and one that quietly underpays her.

Rostered is not worked

The single most common data error here is accruing on the rota. The rota is available, it is tidy, it is in one system, and it is wrong. Shifts get cancelled the night before, swapped, cut short when a client goes into hospital, or extended by two hours because the relief did not turn up.

Accruing on the rota overstates entitlement in a business where shifts get cancelled and understates it in one where they overrun, and in both cases the ledger stops reconciling with payroll, which is the only external check the system has. The rule is to accrue on the same hours the worker was paid for, from the same source payroll used, so that the two can be compared.

Three workers, one leave year

Hours accrued and taken for three irregular-hours workers over one leave yearThree vertical stacked bars, each showing hours of holiday accrued in a leave year split into hours taken in green and hours accrued but still untaken in red. A term-time cook accrued about one hundred and sixty-five hours, of which one hundred and eighteen were taken and forty-seven remain. A bank carer accrued about two hundred and five hours, of which only sixty-two were taken and one hundred and forty-three remain. A weekend driver accrued about eighty-six hours, of which seventy-four were taken and twelve remain. A note says it is the same employer, leave year and rule in all three cases, and the middle bar is the one that turns into a payment somebody has not budgeted for.0100200300400~165Term-time cook~205Bank carer~86Weekend driverHours of leave takenAccrued and still untakenSame employer, same leave year, same rule. The middle bar is the one that turns into a payment somebody has not budgeted for.
Fig 2. Hours accrued in one leave year for three working patterns, split by what was actually taken. The red band is the liability.

Why the bank carer looks like that

Because bank staff are called when somebody else is off, and the times when somebody else is off are exactly the times a bank worker cannot take leave. The pattern is structural rather than personal, it shows up in every business that keeps a flexible pool, and it is invisible in a system that only records leave taken.

That is the argument for the ledger in one sentence. A business that can see the middle bar in month four has options: it can encourage leave, it can plan the cash, it can look at whether the pool is being used the way it was meant to be. A business that sees it on somebody’s last day has a bill.

The four inputs, and how each one goes wrong

  • Hours worked. Taken from the rota instead of the timesheet.
  • Covered absence. Omitted entirely, so long-term sick accrues nothing.
  • The rate. Hard-coded at 12.07% for a worker whose contract says more.
  • The period. Attributed to the wrong leave year at the boundary.

Rounding has a direction

Accrual produces awkward numbers — 12.07 per cent of 37 hours and 40 minutes is not going to land on anything tidy — so something has to round. The rule the system follows is to round up, to the nearest part-hour, every time.

This is not generosity, it is risk management. Rounding down accrual, in one direction, across every period, across every irregular-hours worker, for four years, compounds into a systematic underpayment that is indefensible precisely because it is systematic. The cost of rounding the other way is a few minutes per worker per year. The next post is what happens to those hours at the year end.

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