How To Calculate Holiday Pay;Overtime And Shift Premiums

How To Calculate Holiday Pay.Holiday pay; overtime and shift premiums.Holiday pay received by employees whose labour cost is normally regarded as direct should be charged to jobs by means of an inflated hourly rate. For example, if the employee is normally paid £5 per hour for a 40 hour week and is entitled to six weeks’ annual holiday, then he will receive a total of £1200 holiday pay (six weeks at £200 per week).

How To Calculate Holiday Pay;Overtime And Shift Premiums

Assuming that the employee works the remaining 46 weeks, his attendance time will amount to 1840 hours (46 weeks at 40 hours per week). Dividing £1200 by 1840 hours gives an addition of approximately 65p per hour to the employee’s hourly wage rate to ensure that the holiday pay is recovered. The advantage of this approach is that holiday pay is treated as a direct labour cost.

How To Calculate Holiday Pay.

A worker with more than 12 months of service is entitled to vacation of at least three weeks fully paid.

However, not everyone knows the formulas that are usually used in the remuneration process for calculating vacations , therefore, it is also possible that they do not know what they should consider when calculating the vacations of their workers.

Calculating holidays is very simple. It is enough to give him the fifteen business days required by law and add to the remuneration the non-business days covered by the period.

Each worker enjoys 1.25 days per month worked. Vacations in Chile do not generate an additional payment. Only the payment of his salary to the worker is guaranteed at the end of the month, despite the fact that he has been absent. 

In accordance with article 68  of the Labor Code , “ every worker, with ten years of work, for one or more employers, continuous or not, will have the right to an additional holiday day for every three new years worked, and this excess It will be subject to individual or collective bargaining . In short, if you have worked for a company for more than 10 years , you can have your 15 business days plus one additional. How would the sum be? Here we tell you…

Example of progressive vacation table: 

This would be the calculation of progressive holidays according to what the law stipulates. Remember that there is no cap on progressive vacations. 

13 years of service 15 working days + 1
16 years of service 15 business days + 2
19 years of service 15 business days + 3
22 years of service 15 business days + 4

How to calculate vacations in a settlement;How To Calculate Holiday Pay.

How is the calculation of vacations in cases of voluntary resignation or dismissal when the worker has not yet completed the year of service? It is a frequently asked question and here we offer an answer to that concern.

As the law establishes that the annual holiday corresponds to 15 rest days per year, you must divide 15 days by 12 months, to obtain the number of rest days that the worker accumulates for each month of work.


  • 15 / 12 = 1.25 days off for each month of work. 

Then, you have to divide 1.25 (accumulated days in a month) by 30, to obtain the fraction of accumulated holidays daily:

  • 25 / 30 = 0.04167 cumulative fraction of holidays per day. 

Once you have this data clear, you just have to multiply:

  • 25 for the number of months worked between the date of hiring and the date of resignation or dismissal of the employee.
  • 04167 for the number of days that do not complete the month unit. 

For example, imagine that the employee whose vacation you are trying to pay worked nine months and 18 days. Thus, you will have to perform the following operation:

  • 9 x 1.25 = 11.25 vacation days. 
  • 18 x 0.04167 = 0.75 vacation days.

Adding these two results would give you a total of 12 vacation days.Remember that these days correspond to the holiday, but the remuneration is settled based on the calendar days, that is, you must be paid on Saturdays, Sundays and holidays during your vacation period.

Consequently, assuming that the worker’s daily salary is $9,200, to determine the amount of his vacation compensation, you would multiply them by 12 (earned holidays):

  • $9,200 x 12 = $110,400.

To that figure you must add the payment of the non-working days that are in your rest period, counted from the day following your resignation or dismissal. Imagine that he left the company on a Wednesday, so the 12 days of public holidays would start to run from Thursday. This would imply the appearance of two Saturdays and two Sundays within their vacation period, which must be paid in the normal way. Therefore, you would have to perform the following operation:

  • $9,200 x 4 = $36,800, corresponding to non-business days. 
  • $110,400 + $36,800 = $147,200, corresponding to the employee’s total compensation.

Now that you know how to calculate vacations, what you should do is ensure that workers enjoy them as required by law. In addition to being their right, they are the best mechanism to free them from work stress and allow them to recharge their batteries for a new period, generating a positive impact on productivity, efficiency and work environment.

Characteristics of the holidays

Vacations —also known as rest days or annual holidays— are:

  • Inalienable: they cannot be denied, but the worker cannot reject them either.
  • Cumulative: only for two periods. It is mandatory for the worker to take vacations before starting a new accrual period of the same benefit.
  • Calculable based on business days: that is, from Monday to Friday.
  • Paid: the full salary must be paid and they do not imply an extra expense for the company. It should be noted that they cannot be canceled or exchanged for money and must be enjoyed. In case the salary is variable, the last 3 months are taken into account to determine the payment.
  • They cannot be compensated: this means that it is not possible to exchange vacation days for money, only in the event of dismissal, resignation or progressive vacations.
  • They must agree: the worker must request their vacation days in advance and these may be rejected or approved according to what the employer has, they must reach an agreement that benefits both in terms of the date of enjoyment.

In addition, the bonuses or readjustments to the remuneration are maintained, regardless of whether the employee was out when an extraordinary payment was made in the company.If the worker suffers an accident or becomes ill and obtains medical leave , the vacation period will be suspended until the completion of this or as agreed by the parties.This is because the main idea of ​​the annual holiday is the enjoyment and rest for the completed work period, so that the worker can regain strength, recreate, share with family and friends.

Why We Must Calculate Holiday Pay.

The enjoyment of vacations is always beneficial, both for the company and for the workers . Therefore, not only must what is defined in the Labor Code be complied with, agreements and policies must also be established to avoid future problems on this issue.

When workers have a break from their daily routine and their work, they offer better results in their work, carry out activities in a pleasant way and, in this way, you avoid any accident due to fatigue or wear and tear .

Many work accidents are generated by the exhaustion of their workers; having to work long periods of time without rest plus their housework or their daily routine causes an accumulation of stress and for this reason, it is so important to comply with this right, thus avoiding problems of a greater nature.

Implement planning ahead of time to grant vacations to your workers , avoid conflicts between them and organize replacements so as not to overload the rest of the team or part of it. Remember that planning is an essential factor for a successful business.

  • To calculate the vacations of each worker, all the factors described above must be taken into account before determining the rest days that correspond to them. Not all cases are the same and you should avoid having a hard time by not taking into account the importance of this topic.
  • Taking the necessary care with the calculation of vacations is important because in the event of resignation or dismissal of a worker, you will have to pay the equivalent of the rest days that have not been taken.
  • For this reason, it is essential to update the information of each worker in the company, the payment of salaries, contributions and other concepts that allow maintaining an essential organization when determining what is related to vacations, especially when there are paid workers. variable that includes commissions, premiums or any other aspect to consider for its calculation.

by Abdullah Sam
I’m a teacher, researcher and writer. I write about study subjects to improve the learning of college and university students. I write top Quality study notes Mostly, Tech, Games, Education, And Solutions/Tips and Tricks. I am a person who helps students to acquire knowledge, competence or virtue.

Leave a Comment