PART-TIME WORKING - 13.10.2020

Full time to part time: calculating pay and holiday

One of your full-time employees is reducing their hours and moving to a permanent part-time working arrangement. What’s the safest way to calculate their pro rata pay and holiday entitlement?

Last resort

In September 2020 Acas, the CBI and the TUC issued a joint statement reminding employers that redundancies must be a last resort. Other viable options should always be fully investigated and implemented where possible.

To avoid redundancies, one possibility is for full-time employees to move to a permanent part-time working arrangement. Not only can this save you money on salary payments, it can reduce your employers’ NI and pension contributions.

Pro rata pay

Where an employee moves from full-time hours to part time, say five days to three days per week, don’t calculate their new pro rata salary using the number of days to be worked as this can give an inaccurate result in some circumstances.

Instead, work out what each contracted weekly hour is worth and then multiply this figure by their proposed part-time hours.

An example

Let’s suppose that Faye works a 40 hour week over five days and earns £30,000 p.a. Her weekly full time hourly rate is £750 (£30,000 ÷ 40). If Faye’s new part-time working hours are 25 per week, her pro rata salary will be £18,750 per annum (£750 x 25).

Tip. If Faye exceeds her 25 hours per week, she wouldn’t automatically be entitled to additional pay or overtime. This is a matter for agreement. Time off in lieu is also an option.

Holiday entitlement

Any holiday accrued while Faye worked full time is protected. From the point she goes part time, her holiday entitlement is reduced accordingly.

The easiest way to calculate statutory minimum holiday is to multiply the number of days worked per week by 5.6. So, if Faye works her 25 hours over three days, say, Tuesday, Wednesday and Thursday, she would be entitled to 16.8 days’ holiday in a full holiday year.

Tip. Although it works in the employee’s favour, round up to 17 days’ holiday p.a. so it’s easier to manage full and half-day holiday requests.

Bank holidays

If Faye’s employer grants its employees bank holidays in addition to their statutory minimum holiday entitlement, she’ll be at a disadvantage compared to those staff who usually work on a Monday (as several bank holidays fall on a Monday).

Tip. You can avoid this by granting all part timers a pro rata amount of bank holidays according to the number of days they work.

Tip. When her hours change, Faye will be entitled to a statement of changes to employment particulars within one month of the change. Alternatively, an updated contract including these changes and other part-time-specific provisions could be issued (see The next step ).

For a statement of changes to employment particulars and part-time employee clauses, visit https://www.tips-and-advice.co.uk , Download Zone, year 22, issue 18.

To calculate pro rata pay, work out what each full-time weekly hour is worth by dividing the employee’s annual salary by their contracted weekly hours, then multiply this figure by the proposed weekly part-time hours. For statutory minimum holiday, multiply the number of part-time days to be worked by 5.6, e.g. 3 days x 5.6 = 16.8 days p.a.

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