Buying and selling holiday

If an employee requests to buy holiday we understand that we need to check that this doesn't bring their pay below NMW. When we do the calculation for a salaried worker do we deduct the purchased holiday hours from the total annual hours worked. E.g if someone earns £25000 and is paid based on 260 days x 7.5 hours pa (1950 hours). Hourly rate = £12.82ph. If they are entitled to 28 days paid holiday, but want to buy an extra 2 days in, say, the last 6 months of the holiday year, is it correct to say that the calculation of their hourly rate becomes: 15 x £12.82 = £2884.50. Salary payment total for final 6 months = ((£25,000/2) - £2884.50) = £9,615.50. Hours worked in final 6 months = (1950/2) - 15 = 960 hrs So, hourly rate is £10.02 ph and therefore below NMW?

Hi,

We cannot comment on an employer’s specific arrangements, we can only provide general advice and signpost to guidance. 

Any deduction from pay, outside of a very specific list of exceptions, is likely to reduce a worker’s minimum wage pay. Salary sacrifice will always reduce a worker's minimum wage pay. The worker is in essence giving up that portion of their pay in exchange for something else, so it cannot be included in any minimum wage calculations. Any determination would depend on the arrangements in place. 

As you require advice relating specifically to working arrangements you have in place or are considering introducing, then please seek independent legal advice or contact the Advisory, Conciliation and Arbitration Service (ACAS) on 0300 123 1100.

Alternatively, for more information on deductions from pay, payments by workers, and the impact on National Minimum Wage pay please see the following guidance:

Calculating the minimum wage

Thank you.