Question about buying/selling annual leave

[greyinganddecaying]

My company has a policy that if you want to sell back annual leave, it's calculated at 1/260 of annual pay (260 bring the number of working days before holidays/bank holidays are taken).

A couple of people work part time, so think that calculating the monetary value of their annual leave should be 1/208 if you work 4 days/week or 1/156 if you work 3 days a week.

If not considered this before - are they right?

Isn't annual pay what they would get if they weren't part time? Their actual pay is pro rata.

Usually, part time annual leave is is down scaled based on full time equivalent. They get paid the same amount per day as a ft person

Therefore the end value shows be the same whether you calculate it via the full time hours or part time hours.

I think it depends. If they work full days, but fewer days per week, then it should be calculated in the same way as it is for FT staff, add they're having the same amount of time off.

If they spread their hours across five days but work fewer hours each day, then I think the calculation would need to be adjusted to reflect the fact that one day for them is shorter than one day for FT staff.

Actually, what I wrote doesn't make sense. If they work 5 days per week, then 1/260 of their annual pay would be ok.

If they work fewer than 5 days but do full days, then it should be 1/260 of the full time salary rather than their part time one.

I think....

The only fair way would be to calculate the leave and any adjustments in hours, rather than days. So rather than 260 days, it would be 1820 hours per year (based on a 7 hour day).

A full time adjustment for one day would be calculated at 7/1820, but if someone only worked e.g. 5 hours per day, it would be 5/1820, with the FT salary used as a baseline.

If they work full days then their calculation is correct. They would still get paid same daily but less in total.

I'd do it in hours too, if you standard hours are say 40 the fractions (part time hours/40) is then applied to the 1/260

Doing it by days isn't fair is someone works every morning but only 20 hours per week.

My company has this and it's worked out in hours, not days. Your hourly rate isn't affected by whether you're full-time or part-time.

Sorry I should have said the 260 converted to hours

@AlexaShutUp

Actually, what I wrote doesn't make sense. If they work 5 days per week, then 1/260 of their annual pay would be ok.

If they work fewer than 5 days but do full days, then it should be 1/260 of the full time salary rather than their part time one.

I think....

I think what they're saying is that if the amount everyone is paid is the same (but pro rataed) (eg £100 per day) people working 5 days a week would be on £26k, 4 days a week would be £20.8k, 3 days £15.6k.

So when it comes to calculating what you get per day if you were to sell back your annual leave, if you're full time, you work on 1/260 of your salary and get £100 for each day you sell back. Sounds good.

But if you used 1/260 for those working 4 days, they'd only get £80/day and for those working 3 days they'd only get £60.

So the amount you'd get back per day would be less if you work full time. So to be fair they should work it out either on the FTE salary, or by using 208/156 to calculate the right day rate for part time workers.

Does that make sense?

In this situation all people work the same hours per day (8 hours)

Oh god, I'm getting so confused!

If they all work the same number of hours per day, then I think each day of bought/sold leave should be calculated as a proportion of the FTE salary, and not as a proportion of the individual's actual salary, if that makes sense. Because each day is worth the same, whether you work FT or PT.

Is that right??

@AlexaShutUp

Oh god, I'm getting so confused!

If they all work the same number of hours per day, then I think each day of bought/sold leave should be calculated as a proportion of the FTE salary, and not as a proportion of the individual's actual salary, if that makes sense. Because each day is worth the same, whether you work FT or PT.

Is that right??

I'm starting to this is right! But it is very confusing!

If everyone is on £26k as a full time salary and they all work full days then it would be £100 per day of holiday regardless of their working pattern as their salary and holiday entitlement would be pro-rated

But that isn't real life so you need a formula that's going to work for every working pattern which is why you need to do it in hours and hourly rate.