How do I calculate an employee’s Annual Leave?

Whether an employee takes all, or part, of their annual holidays, the way to calculate holiday pay is the same.

The greater amount of either below calculations is what the employee should receive:

  • The employee’s ordinary weekly pay (OWP) at the start of the annual holiday
  • The employee’s average weekly earnings (AWE) from the last 12 months. Before the last payment period ended, and before the start of the last annual holiday.

To calculate an employee’s OWP, it must include the total amount an employee receives during a normal working week along with extra payments such as commissions, overtime and allowances.

To calculate an employee’s average weekly earnings, the employer must calculate their gross earnings over the 12 month period before the end of the last payroll, and then divide this figure by 52. If the employee is entitled to extras such as salary and wages, allowances, overtime, performance payments or commissions, these must be included in the total amount.