What are allocation calculation rules?

Allocation Calculation Rules are options that are set for employees to determine how absence should be calculated for new hires, who join part way through the employment year. By default, SMB will calculate the percentage of the year the employee is scheduled to work from their employment start date to the end of the holiday period, then add together the base allocation and the total number of public holidays that fall in the full year, then apply a pro-rated amount to the employee as their holiday allocation.

While this is the correct approach if your company provides the statutory minimum of 5.6 weeks (28 days holiday) made up of 20 days holiday plus bank holidays, this may not be how you wish to apply calculations if your company offers a greater package to employees.

With Allocation Rules, you can define two key components of the allocation calculation: the date to start accruing holiday and whether or not public holidays should be pro-rated.

Firstly, changing the start point of calculation is used if your organisation has an employment contract that stipulates whether employees accrue holiday for every working day, or for every half-month or full month that they work. To illustrate, let’s take an employee who has started on the 6th February.
With the start point set to the employment start date, the system will calculate their pro-rata allowance from the 6th January. If the start point is changed to half-months, the calculation will begin from the 15th February and if the start point is changed to full months, then the employee won’t start to accrue holiday until the 1st March, as March will be the first full calendar month they work.

Secondly, looking at the pro-rated public holidays, and assuming the employee started on the 7th January, if public holidays are pro-rated, then the employee would receive a pro-rated allocation based on 20 days holiday plus 8 bank holidays. As they have only missed a couple of days of the working year, they would still receive 28 days holiday for the year – however, there are only 7 public holidays remaining (the employee has missed New Year’s Day) so consequently would be left with 21 days of “bookable” holiday.

If the public holidays are not pro-rated, then the employee would receive a pro-rata amount of the base holiday allocation plus any remaining public holidays in the year, giving them a first year allocation of 27 days less the 7 remaining public holidays.

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