How to Calculate Holiday Accruals for Temporary Workers?

Author: Eugenija Steponkute
Published: 25/06/2024

Holiday accruals can be tricky if your business runs under less common circumstances. In this article, we will discuss holiday accruals for temporary workers and the best ways to calculate them. 

In last week’s article, we talked about holiday accruals as a general process, how it can get complicated and what steps can be taken to simplify it. To further that knowledge, we will now be exploring the topic further by looking into a specific scenario in which holiday accrual calculation can get very complex. The topic of today is holiday accrual for temporary workers. Since these employees don’t work the full calendar year and often have differentiating rates, most of the common formulas don’t apply.

We will be exploring why the traditional approach isn’t just ineffective but also harmful if you try forcing it. Additionally, we propose a better solution, as well as a couple of additions to make the process even smoother. Finally, we will talk about what you should realistically expect to invest and what payment plans exist. 

How Does Holiday Pay Work for Temporary Employees?

Temporary employees are legally entitled to paid holiday, just like most other workers. However, instead of having a minimum holiday entitlement, temps’ time off is calculated via holiday accruals. However, due to a variety of factors, most commonly used formulas are not applicable, making the process complex. 

It is widely suggested that a temporary worker’s holiday accrual is 12.07% of their hourly rate, for each hour they work. However, this is a rough estimate that doesn’t fit all situations and should therefore not be a pointer. 

Traditional Ways Don’t Work

The key problem with temporary staff’s holiday accrual calculations is that they are notoriously difficult to calculate. Most common practices are simply non-applicable in most of the cases. What’s worse, the process is very susceptible to errors, takes a lot of time and is generally tedious. We are about to dig deeper into these issues. 

Manual Calculations and the Free Government Tool

The most common practice of calculating holiday accruals for temporary workers is by doing it manually. As we’ve discussed in our previous article, there are many different formulas available, but they mostly cater to the usual scenarios, alas not all of them. So if you have a more complex pay situation on hand, such as differentiating rates or a very unique contract, it is not going to be the right solution for you. And even if you work out the right formula, the question is how sustainable is it to run these calculations every time? 

Another way to handle temporary workers’ holiday accrual calculations is by using a free official tool provided by the government. While it takes into the equation all the most recent changes and is regularly updated, it is still rather clunky. Similarly to the formula approach, it is rather limited to more common circumstances. While there are options to calculate holiday accrual in more complex scenarios, the tool is still lacking. Not to mention, it isn’t the most reliable in terms of accuracy. We would recommend using it for individuals to get a rough idea of their holiday accrual rather than for businesses to calculate how much time off their teams have accrued.

Price of Your Time, Cost of an Error

The key issue with the traditional ways is that they are time-consuming and very prone to error. As humans, we are bound to make mistakes. And the more complicated the task is, which frequently occurs with holiday accrual for temporary workers calculations, the higher the risk of an error. Alternatively, using the tool can significantly cut the time you spend on it, but as discussed above, its accuracy is debatable. 

The biggest problem here is that both assets are too expensive to waste. Your time is the most valuable business resource you have. How and where it’s applied will directly influence the speed and scale of your growth. If you continue wasting it on tasks such as calculating holiday accruals, you will be consistently losing a lot of money. Additionally, errors that are likely to occur, can also come to be very costly. If you short-end your temporary workers in terms of time off, this may lead to legal problems. Giving them more paid leave than they accrued, will naturally lead to losses. 

Better Solution is Available

As ominous as it all sounds, don’t feel discouraged. There is still a way to simplify holiday accrual calculations for temporary workers specifically. As a plus, it will also bring additional benefits to your business as a whole.

Holiday Management System

The best available solution on the market is literally designed to deal with operations like holiday accrual calculations. There is a vast market of holiday management systems, each offering a unique set of features. Alas, it can be a little daunting to begin your search due to a vast range of options. We recommend writing down the modules that are a necessity for you as this will help you narrow your search down. If you’re utilising temporary workers often, you certainly want a platform that will calculate their holiday accruals for you. 

Apart from that, designated holiday management solutions offer a variety of other benefits. An easier way to both book and review holidays is one of the key selling points as we all know how messy email-based leave requests can get. Another massive convenience such solutions provide is a centralised view of your team’s availability for a chosen period. It helps you plan your workflows better, allocate resources efficiently and address attendance issues the moment you spot them. And you can integrate it with other solutions. 

Digital Timesheets and Shift Scheduling

The best software to integrate a holiday management system with are a timesheet solution and a shift scheduler. All three are related to time management and are crucial in building individual and team workflows that enhance performance and bring the best results. Nowadays, most solutions are easily integrable. If you already have one of the listed tools, one of the search criteria for the other two should be their compatibility with it.

But don’t worry about having to spend hours looking for that perfect trio. Many vendors have also recognised this connection and offer all three as a part of the same package. For example, when you get Timesheet Portal, you get a holiday management system as an in-built module. While we don’t offer a shift scheduling tool yet, we are actively working on adding it to our system in the near future. Until then, we are keeping our platform highly integrable with a number of solutions, making your experience as smooth as possible. 

What to Expect Investment-wise? 

While these solutions sound great, nothing comes for free. Budget can often become a roadblock when it comes to onboarding new tools. But we assure you, there is an option for everyone. All you need is to look around.

Pay for What You Use

Most solutions offer price packages for different feature bundles. Given there’s no one-for-all setup, it’s perfectly normal you will sometimes be overpaying for a subscription because there are additional features, even if you don’t use them. However, just because this is common, doesn’t mean that’s the only payment plan available. Some vendors will only charge you specifically for the modules you use.

The reason we are talking about this with a lot of confidence is because that is the pay model we utilise at Timesheet Portal. To make our solution available to businesses of all sizes, we figured that plans that cater to companies with a few temp workers won’t be relevant to those with hundreds, whereas they are likely to need the same features. So, instead, we switched to charging per number of users. This makes it easy for you to both upgrade and downgrade when needed, and you can build your own platform consisting only of the functionality you need. If you’d like to get a rough estimate, we have a calculator you can use.

Summary

Calculating holiday accruals for temporary workers is a particularly complex task. Most of the holiday accrual formulas don’t apply and the government tool isn’t best suited for it either. Figuring out your own approach or trying to adjust formulas to fit your needs will take time and won’t guarantee accuracy. And, despite these investments, you are still likely to make errors that can lead to legal issues. All in all, there are many issues stemming from one process. But here’s the good news - it can be simplified. 

Holiday management systems of today are able to calculate holiday accruals for temporary workers. Not to mention, they overall offer many benefits to your business as a whole. What’s more, you can enhance their performance by connecting them to your digital timesheets and a shift scheduling tool. Don’t worry if you don’t have any of them yet either. Some platforms have all three as a part of the same solution. What’s more, there are different price brackets and payment plans available to accommodate businesses of any size.

Do you utilise temporary workers often? Check out what Timesheet Portal has to offer.

Free trial

See for yourself how you can save time and money. Enter your details below for a free 30 day no-obligation trial.
Cyber Essentials logo Cyber Essentials Plus logo

Timesheet Portal online software provided by Anfold Software Ltd, a registered company in the UK.