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Set up and manage a Buy or Sell Holiday scheme
Set up and manage a Buy or Sell Holiday scheme
Rebecca Russell avatar
Written by Rebecca Russell
Updated over a year ago

As an employer, to provide employees with additional flexibility, you might allow them to buy or sell some of their annual leave, and spread the cost over the year. This option can currently only be set up by an admin.

Set up a buy annual leave scheme

  1. From the employee's record, click the Leaves tab.

  2. Under the Annual leave section, click Buy/sell annual leave.

  3. Under the Buy annual leave section, enter the number of days to buy.

  4. PayFit automatically calculates the daily rate, the total value of holidays bought, and the remaining deduction amounts.

  5. Click Save.

Set up a sell annual leave scheme

Note: Employees can't sell holidays that would take them below the statutory minimum entitlement of 5.6 weeks (28 days or pro-rata for part-time workers).

  1. From the employee's record, click the Leaves tab.

  2. Under the Annual leave section, click Buy/sell annual leave.

  3. In the Sell annual leave section, enter the number of days to sell.

  4. Choose whether the payment should be made to the employee as a monthly instalment, or as a one-off payment in the last month of the leave year.

  5. PayFit automatically calculates the daily rate to sell annual leave and the monthly, or one-off payment to be made to the employee.

  6. Click Save.

Note: An employee can only buy or sell holidays within a holiday year.

FAQs

What happens if an employee's salary changes?

PayFit will automatically recalculate the employees buy deductions or sell payments using their new daily rate. It uses the new rate to calculate the total value to be paid or deduction, then the remaining balance is divided by the number of months outstanding.

Example

An employee buys six days' holiday at a rate of £100 per day in July.

The annual leave year ends in December.

£600 is divided equally by the six months remaining in the annual leave year.

From July, £100 per month is deducted from the employee's pay.

In October, the employee's daily rate will increase to £110.

The recalculated total deduction is 6 days x £110, £660.

Between July and September, the employee has paid £300, leaving a balance of £360 to be deducted over three months.

The remaining deductions are £120 per month.

If you'd prefer the daily rate to be fixed, even if the employee's salary changes, you can simply override the value. To do this:

  1. From the employee's record, click the Leaves tab.

  2. Under the Annual leave section, click Buy/Sell annual leave.

  3. Under either the Buy or Sell annual leave section, make a note of the existing daily rate.

  4. Click Overwrite, then add the daily rate.

  5. Click Save.

Note: If the employee buys or sells further annual leave at a new salary, you'll need to use the Reset to computed amount, to use their new daily rate.

What happens if the employee has outstanding payments/deductions when they leave?

When an employee's contract is terminated, PayFit calculates one last payment or deduction and increases or decreases the employee's accrued holiday entitlement for the final month. This is taken into account when the PILOH is calculated.

For example, if an employee buys five days' holiday over 12 months, with each month's deduction, they accrue 0.42 days. If they leave the company in the sixth month, they have six months' deductions taken and have accrued 2.5 days' extra annual leave.

Note: If you don't record annual leave on PayFit, there will be no PILOH calculated automatically. For further information on the contract termination process, please view our Help Centre article.

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