SelectPay calculates average holiday pay in line with HMRC legislation, for a breakdown on how this work, review the sections below.
Things to consider;
The average holiday and average hourly pay elements, use the employees' contract information to calculate a rate.
If an employee has no pay element with use for average holiday pay, enabled, the employee's earnings will be 0 for the period.
Calculation
Monthly
SelectPay combines the previous 12 periods of pay, excluding periods where the employee has 0 eligible earnings. Divide the figure by 52 to get a weekly value.
📌Note: If the employee has 0 eligible earnings in a period, SelectPay will look further back for eligible earnings, up to 24 months.
If a worker has less than 12 periods of pay, use the average pay rate for the full weeks they have worked, then divide by the number of periods used. Multiply by 12 and then divide by 52.
Weekly
SelectPay combines the previous 52 periods of pay, excluding periods where the employee has 0 eligible earnings. Divide the figure by 52 to get a weekly value.
📌Note: If the employee has 0 eligible earnings in a period, SelectPay will look further back for eligible earnings, up to 104 weeks.
If a worker has less than 52 periods of pay, use the average pay rate for the full weeks they have worked, then divide by the number of weeks used.