I have a question in relation to the calculation of the value of untaken annual leave which is used when an employee ceases employment.
In our case, 10% of our salary is "deferred" until December, when it is paid as a lump sum. Historically, this was a discretionary "Xmas" bonus which was later formally integrated into salary. This occurred many years ago. Prior to the integration, the company's formula for calculating the value of untaken leave was: Basic Salary / 52 / 5, giving an average daily rate. The 10% Bonus, as it was then, was not used as part of this calculation. However, the company has persisted with this formula right up to the present and it does not appear to have been challenged.
My position is that I may be ceasing employment in the near future and as I have a considerable amount of untaken leave, built up over many years, I need to know if the formula currently used is correct - or should it be based on the "Gross" Salary amount?
I have read the booklet found on the ENTEMP website at link: http://www.entemp.ie/publications/employment/1997/holidays.pdf
and I have highlighted a section below which I think may be applicable.
Perhaps someome could clarify this matter for me,
Many Thanks,
Peter.
"How to calculate an employee's holiday pay
2.3 The method of calculating the weekly rate of holiday pay is as follows:
(i) If the employee's pay is calculated wholly by reference to a time rate or a fixed rate or salary, the amount paid to the employee for one week of paid annual leave is equal to the amount paid to him/her in respect of the normal weekly working hours last worked by the employee before the annual leave commences. This payment includes any regular bonus or allowance that does not vary in relation to work done, but excludes any pay for overtime."
In our case, 10% of our salary is "deferred" until December, when it is paid as a lump sum. Historically, this was a discretionary "Xmas" bonus which was later formally integrated into salary. This occurred many years ago. Prior to the integration, the company's formula for calculating the value of untaken leave was: Basic Salary / 52 / 5, giving an average daily rate. The 10% Bonus, as it was then, was not used as part of this calculation. However, the company has persisted with this formula right up to the present and it does not appear to have been challenged.
My position is that I may be ceasing employment in the near future and as I have a considerable amount of untaken leave, built up over many years, I need to know if the formula currently used is correct - or should it be based on the "Gross" Salary amount?
I have read the booklet found on the ENTEMP website at link: http://www.entemp.ie/publications/employment/1997/holidays.pdf
and I have highlighted a section below which I think may be applicable.
Perhaps someome could clarify this matter for me,
Many Thanks,
Peter.
"How to calculate an employee's holiday pay
2.3 The method of calculating the weekly rate of holiday pay is as follows:
(i) If the employee's pay is calculated wholly by reference to a time rate or a fixed rate or salary, the amount paid to the employee for one week of paid annual leave is equal to the amount paid to him/her in respect of the normal weekly working hours last worked by the employee before the annual leave commences. This payment includes any regular bonus or allowance that does not vary in relation to work done, but excludes any pay for overtime."