Cost of Unpaid Leave?

[RichB]

Quick question, how would a company work out the amount to deduct from an employee if they wanted to take unpaid leave?
Salary/260 x number of days taken? Are there any other costs or factors to be taken into account from the company's perspective? Tnx...

[rog007]

Unless negotiated to the contrary, all forms of remuneration would cease for the period of absence. Is that what you're enquiring about?

[Countdown]

RichB said:

Quick question, how would a company work out the amount to deduct from an employee if they wanted to take unpaid leave?
Salary/260 x number of days taken? Are there any other costs or factors to be taken into account from the company's perspective? Tnx...

It varies from organisation to organisation. Some pro-rata the salary over "working days", some over total days in a month. For example; assume you take 5 days unpaid leave...

Company 1 will deduct 5/31 x monthly salary
Company 2 will deduct 5/24 x monthly salary

Company 2 takes into account non work days such as weekends.

[red_slr]

Do they have a contracted number of hours to work per day / week / month?

[RichB]

Thanks; it was a semi hypothetical question but should one of my employees want to take a week unpaid leave I wondered what calculation to use to work out their pay for the month in which they took the leave. It's not happened yet but it may do so I was just being prepared in advance I realised there's a few ways of doing it so wondered what would be most acceptable to the employee.

[Tafford]

I've pondered the same question. As presumably one would expect an Employee to make profit for the company whilst working doesn't it put the Employer in a position of loss to simply not pay them. The company is theoretically losing the profit element which is the whole point of employing them in the first place, so playing devils advocate surely unpaid leave should be deducted as time(wages) + %age (profit)?

[RichB]

Based on Countdown's post below I guess I could use the calculation that is most preferable for the company but conversely more costly to the employee.

For example talking the annual salary and dividing by the number of working days in the year (253 in 2015) results in a rate per working day, then simply multiplying this by 5 (or number of days taken) seems to result in a higher figure than any other method.

[Countdown]

Tafford said:

I've pondered the same question. As presumably one would expect an Employee to make profit for the company whilst working doesn't it put the Employer in a position of loss to simply not pay them. The company is theoretically losing the profit element which is the whole point of employing them in the first place, so playing devils advocate surely unpaid leave should be deducted as time(wages) + %age (profit)?

Err... no

Unless of course you pay them the amount of profit they make.....

[blindswelledrat]

RichB said:

Quick question, how would a company work out the amount to deduct from an employee if they wanted to take unpaid leave?
Salary/260 x number of days taken? Are there any other costs or factors to be taken into account from the company's perspective? Tnx...

I think it is more than reasonable to do it as 'working days'.
The 260 days you quoted includes paid holiday. If they get 4 weeks holiday per year you are actually paying them X for 240 days work.

[ikarl]

blindswelledrat said:

I think it is more than reasonable to do it as 'working days'.
The 260 days you quoted includes paid holiday. If they get 4 weeks holiday per year you are actually paying them X for 240 days work.

good point - if they take unpaid leave, will they acrue the same amount of holidays as someone who doesn't?

[JB!]

You pay them for 365 days - weekends - leave.

lets say 240 days.

salary/240 = cost to employee before tax.

[blindswelledrat]

JB! said:

You pay them for 365 days - weekends - leave.

lets say 240 days.

salary/240 = cost to employee before tax.

Actually bank holidays too.
Nearer to 230 days.
I worked out that our average employee works 220 days with current entitlements.

[JB!]

blindswelledrat said:

JB! said:

You pay them for 365 days - weekends - leave.

lets say 240 days.

salary/240 = cost to employee before tax.

Actually bank holidays too.
Nearer to 230 days.
I worked out that our average employee works 220 days with current entitlements.

Yeah I must be near that.

Comes out Pre-Tax and the PAYE goes down accordingly.

[sgrimshaw]

Do a similar calculation as if you were working out the rate to pay overtime / extra hours.

Take annual salary, divide by number of weeks in a year to get weekly pay.

Divide weekly pay by 5 to get daily rate, or by number of standard work hours per week (eg 37.5) to get hourly rate.

So, for a salary of £20,000.00:

20000/52.143 = £383.56 per week

383.56/5 = £76.71 per day

383.56/37.5 = £10.22 per hour

[Jockman]

Surely you would save the Employer's NI on that week's unpaid leave?

[blindswelledrat]

Jockman said:

Surely you would save the Employer's NI on that week's unpaid leave?

Its not relevant. You save it because you aren't paying them. Its not a gain of any type in the same way as sacking them and saving £20k per year is not a 'gain' as you want to employ them

[hotchy]

Dont be too lenient with the unpaid leave. The woman at my work took advantage with 12 weeks this year so far, then asked for a further 2 weeks last week. At this point she knew there was zero cover this time as other holidays (first of the year) and the one other staff member off for an operation. Guess her reply... handed the keys in and wont be back. 1 week to find a new staff member now or we'll be opened only limited hours for 2 weeks. So iv learned my lesson and anyone starts to take the proverbial they will be replaced sharpish. So much for being nice, i think i may just become a " of a boss" now.