Under the Working Time Regulations 1998 employees should receive “a week’s pay” for a week’s leave. For employees with a fixed monthly salary this is as simple as paying them that fixed salary. However, it’s more complicated if your employees’ salaries fluctuate, either because they work irregular hours, or earn regular commission, bonus or overtime payments.
If pay fluctuates from month to month you must first calculate your employees’ average weekly pay (based on the last 52 weeks’) and then pro-rate this to the amount of annual leave they are taking.