Payroll Considerations - Holiday Pay

Datafile Software

Payroll Considerations - Holiday Pay

There are two methods available to you to handle holiday pay:

Give extra pay in the last period before the employee goes on holiday. This is usually given in terms of weeks or days pay

Make a contribution to a "holiday bank” for each employee for each period they work. In the pay period that holiday is taken, the bank is "emptied” into their gross pay for that period. The holiday bank is accumulated either from a fixed amount each period or a percentage of gross (basic plus overtime) or basic pay

The Datafile Software payroll handles either system. The advantages of the latter are that the notional holiday pay is accrued in your nominal ledger so that you have already provided for it in previous periods, and also you are not put in the position where you pay out more holiday pay than the employee is entitled to.