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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50198
Experience:  Qualified Employment Solicitor
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Could you please advise: How should daily rate of pay from

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Could you please advise: How should daily rate of pay from annual salary be calculated?
Contract states annual salary shall be £25000 payable in monthly intervals. Employee Handbook states leave is calculated as 1/260 of annual basic salary. No other mention of how daily rate is calculated in any other circumstances.
Ben Jones : , my name is ***** ***** it is my pleasure to assist you with your question today. The 1/260 rule is a common way of calculating an employee's holiday pay. That is because there are 260 available workig days a year so if you divide the annual salary by 260 you get the daily rate employee and can then use that amount to see how much they should be paid day's holiday

Ben. Thanks answer. You state that the 1/260 rule is a common method of calculating holiday pay but my question is how should daily rate of pay be calculated, not only pay but also an employee starts mid month or takes unpaid leave. The issue is the working days in calendar month method has been used although the handbook states the 1/260 rule pay, therefore the employer has used a different method to the only method of calculation stated in the handbook & contract.


Ben. Not used this service before so could you confirm that you are looking into my last comment please or is the answer you gave the entirety of the service you provide?


As you have entered the chat twice since I responded to your answer I am guessing that I will not be hearing any more from you. If that is the case I am afraid to say I am not very impressed as I do not feel that you actually answered my question. Your answer related to holiday pay which is not what I asked. I would like to give the benefit of doubt and will leave it another hour before rating my experience. If you are looking into the matter please let me know so that I do not rate you unfairly. Thank you.

Ben Jones : sorry about this I tried to get back into chat last night but my connection kept dropping. Just to clarify queries, the normal daily rate would be calculated in the same way. Whether an employee takes holiday, starts part way through the month or returns after unpaid leave, their daily rate would be the same and it is based on their annual salary which does not change. You can use this salary calculator to confirm that and you will see that the answer is the same if you were to divide the salary by 260 (the calculator only gives you a monthly or weekly wage but simply divide the weekly answer by 5 to see the daily rate):
Ben Jones :
Ben Jones : Hope this clarifies your query?

Ben. Thanks back to me. I understand what you have said but what I need to know is whether based on what is stated in the handbook about calculation of holiday pay would an employer be legally able to use the working days in calendar month method to calculate the daily rate in order to pay days in the first part month of employment and also to deduct days' unpaid leave? This has actually happened and based on the 1/260 calculation the employee is £100 out of pocket but I need to know what legal precedents there are governing which rate can be used or whether both rates can be used as explained above.

Ben Jones :

if the employee handbook forms part of the employee's contract then the way the holiday is calculated will be contractually binding as per its terms so if the employer uses another method it would amount to a breach of contract. Even if it was not contractual an employee's holiday pay should be equivalent to the rat they would usually get had they been in work

Ben Jones :

Does this clarify things ?


Thanks Ben yes it does.

Ben Jones :

you are welcome, all the best

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