Use months started method for mid year starters - Pro-Ration Calculation

An optional change has been made to the pro-ration calculations used for employees who start mid-year.

This change calculates the employee’s allowance based on the number of months started in their employment.

This differs from the calculation previously used which was, as all of our pro-ration calculations, based on the number of days.

This change only affects employees who started mid-year, and do not also finish mid-year (in the same year that they started).

It does not affect: a) those who finish mid-year only or b) those who both start and finish mid-year.

This is disabled by default. 

This can be enabled by setting “Use months started method for mid year starters ONLY?” to “Yes”  when editing a Time Off type

 

Because this setting is provided at the level of a Time Off type, it is possible to add a Time Off type for statutory employees with the setting enabled, and a Time Off type for (eg) US employees with the setting disabled for example. 

Examples:

Excerpt taken from Guide on Calculating Statutory Holiday Entitlement for Workers:

The statutory holiday entitlement for a worker who starts part-way through a leave year is calculated as:

Leave entitlement for full leave year × (Months Started / 12); rounded up to the next half or whole day (whichever is closer)

This is calculated in a three-step method:

1. Calculate the worker’s full annual leave entitlement;

2. Pro-rate based on the number of months started;

3. Where this includes a fraction of a day, round up to the next half or whole day (whichever is closer).

Example 1:

Charlie starts work on Monday 2nd September 2019, working 5 days a week. His contract states that his leave year starts on 1st April 2019 and ends on 31st March 2020.

Between 2nd September 2019 and 31st March 2020, Charlie works days in seven months.

Step 1 – Calculate full annual leave entitlement 

Charlie’s full annual leave entitlement can be calculated based on the methodology laid out in Section 1.1 of this guidance. For a full year, Charlie is entitled to the lower of 28 days or 5.6 x 5 days (also 28 days). Therefore, Charlie’s full annual leave entitlement is 28 days.

Step 2 – Pro-rate based on the number of months started 

Charlie works in 7 months out of 12 in the leave year (with the first month starting on 2nd September, the second month starting on 2nd October etc). This is entered into the equation above in order to pro-rate the entitlement: 28 days × 7 / 12 = 16.33 days

Step 3 – Where this includes a fraction of a day, round up to the next half or whole day (whichever is closer) 

The final step is to round it up to the next half or whole day (whichever is closer). 16.33 rounded up is 16.5 days. Therefore, Charlie’s leave entitlement to the end of the leave year is 16.5 days.

In the above example, Step 2 is where we would normally calculate based on the number of days, and this method allows calculation by the number of months.

The following tables demonstrate employee entitlements based on having a statutory entitlement and a holiday year start date of 1/3/22 (1st March 2022). Rounding is turned off in order to demonstrate the difference.

Setting “Use months started method for mid year starters ONLY?” to “No” results in the following:

Employee	Start date	Leave date	Current days method
Aimee	30/04/2022		23.4
Benjamin	01/04/2022		25.62
Daniel		03/01/2023	23.7
Freya	01/05/2022	13/01/2023	19.79

Note that using the above method:

• Aimee and Benjamin have different allowances.

Setting “Use months started method for mid year starters ONLY?” to “Yes” results in the following:

Employee	Start date	Leave date	New months started method
Aimee	30/04/2022		25.67
Benjamin	01/04/2022		25.67
Daniel		03/01/2023	23.7
Freya	01/05/2022	13/01/2023	19.79

Note that using the above method:

• Aimee and Benjamin now have the same entitlement - this is because they started in the same month as each other.

• Daniel’s entitlement has not changed - this is because he did not start mid-year.

• Freya’s entitlement has not changed - this is because, whilst she did start mid-year, she also finishes mid-year.