Part-time Employees and Holiday Pay: Explanation for Businesses Going Global

Holiday pay is one of the types of supplemental pay that many employers are actively using to strengthen their HR-brand and retain talent in their teams. The topic gets tricky when holiday pay is considered in regards to part-timers. Do they contribute enough to be offered paid time off work on national holidays? How to manage remote part-timers that may come from different legislations and expect different holiday pay policies? The new article by EasyStaff Payroll takes a look at holiday pay meaning and management and overviews a global approach to holiday pay for outsource teams both at home and overseas. 

Defining Holiday Pay 

The definition of holiday pay is on the surface. It is the money that a worker receives from their employer during national holidays. As an employee, they are taken care of by the employer. Therefore, they are paid even when it is a day off on a national holiday (e.g. Christmas). 

The seemingly easy concept gets a bit complicated when applied to a global scale. For example, in France and Spain employers provide workers with a full day’s pay for a holiday, no matter how long the actual working way was. Alternatively, Canadian and Japanese companies do not by default provide national holiday pays, though this aspect may be additionally discussed in a work contract.

Laying the foundation 

The concept of holiday pay is built on the following fundamental terms. 

• Employee vs. Independent Contractor. The distinction boils down to the level of independence. An employee is controlled and directed by an employer, and the latter is responsible for withholding taxes and providing certain benefits. In contrast, an independent contractor (or freelancer) is self-employed. Therefore, the responsibility of tax management lies on the contractor. Formally, holiday pay legislation is aimed towards formal employment and not independent work engagement.
• Full-time Employee. Typically, a full-timer is expected to work the standard 35 or 40 hours per week. The concrete conditions are defined in a work contract. 
• Part-time Employee. Work hours for this type of workforce may be about a half of a full-timer, i.e. about 20 hours per week. The extent of monetary benefits is set by the company. For example, health insurance may be provided to both full-time and part-time staff but it may cover a limited range of services for part-time teams. 

Holiday Pay and The World 

How do companies from around the world manage holiday pay? Let’s look at some examples below. 

United States

In the US,  no unified federal law mandates holiday pay for employees, regardless of their status and the  amount of work hours. So holiday pay policy is defined by the HR. Sometimes companies choose to weaponize holiday pay as an advantage in building their HR-brand. 

• Employer’s POV. Holiday pay may be a lucrative argument in favor of staying with the company, ultimately helping retain talent, especially in competitive industries. However, to avoid overspending, holiday pay may only be available to full-time employees.
• Employee’s POV. Part-timers may feel mistreated when they are denied holiday pay, especially if their performance is as accurately tracked and KPI’ed as full-time employees’. 

Europe

As a multinational region, Europe shows significant diversity in holiday pay regulations dictated by governments. In these countries, both part-timers and full-timers are entitled to holiday pay as well as other benefits. 

UK. The pro-rata rule defines how much holiday pay is offered to part-timers. So if a full-timer gets 28 days of paid vacation, then a part-time worker gets an average of 15 paid days away from work. The rule is equally applicable to all other supplemental pay options. 

Germany, The national labor laws are pretty fair to part-time workers. Employers have to give pay for public holidays, and how much a part-timer receives is proportionate to the amount of hours worked. 

France and the Netherlands. Similar to the UK’s pro-rata basis, the French and Dutch employers follow inclusive HR policies providing their part-timers with paid holidays. 

• Employer’s POV. While employers of Europe seem to enjoy a more committed and motivated workforce, talent retention comes at quite a cost, made up of multiple additional supplemental pay forms. 
• Employee’s POV. European employees generally enjoy strong legal protections and are provided a wide range of benefits, including paid holidays.

Commonwealth of Independent States (CIS)

The CIS region, where countries share a history of past unity, have similar rules regulating holiday pay.

Russian labor law guarantees paid public holidays to all employees, including part-time workers. If a holiday falls on a weekend, the holiday is typically extended to the next working day.

Ukrainian labor law provides similar guarantees, ensuring that all employees are compensated on public holidays.

Likewise, Belarus also mandates paid public holidays to employees. If a holiday falls on a weekend, an additional day off is granted. 

• Employer’s POV. CIS employers need to comply with these labor laws to avoid penalties and maintain satisfaction among the staff and, therefore, a low level of staff turnover. 
• Employee’s POV. CIS employees rely on these guaranteed benefits to provide financial stability and work-life balance.

Asia

Asia is a diverse region with a wide range of labor laws and cultural practices.

Japanese labor law guarantees paid annual leave, but there is no specific legal requirement for paid public holidays. However, many companies incorporate a practice of paid holidays as a benefit to attract and retain employees. These holidays are determined by the HR management itself.

South Korean labor law mandates paid public holidays for companies with five or more employees. Part-time employees are also entitled to these paid holidays.

Chinese HRs offer varying levels of holiday pay rates for its full-time and part-time staff. The downside is, China doesn’t boast a lot of national holidays. 

• Employer’s POV. Asian employers face a need to strike a balance between the costs of holiday pay and the need to remain competitive in the global talent market.
• Employee’s POV. Asian employees often value job security and long-term employment, and benefits such as paid holidays seriously strengthen employees’ intention to stay with the company. 

Factors Influencing Holiday Pay Policies

Along with the national holiday pay regulations, internationally several other factors may come into play in relation to part-time employees.  

Company Culture: Some companies have a strong culture of valuing employees and providing helpful benefits, and others closely monitor budgeting for employee benefits, optimizing where possible. 

• Example: In a corporate culture with a focus on saving, holiday pay is only offered to part-time employees who have worked a minimum of 1000 hours in the previous year.

Industry: Certain industries, such as healthcare and hospitality, often require employees to work on holidays, and may offer premium pay rates as compensation.

• Example: The Grand Illinois Hotel pays part-time banquet waiters and workers x1.5 hourly rate for working on Christmas, a peak season for the industry.

Unionization: Unionized workplaces typically have collective bargaining agreements (CBA) that have a major influence on holiday pay policies.

• Example: The Automotive Workers Union agreement with MachineOrg says that part-time assembly line workers are eligible for holiday pay after 6 months of continuous employment.

Competition: Holiday pay may be a powerful reason for employees to stick with the company and not consider other job offers..

• Example: Orange, fighting against challenging HR-brand competition in the hunt for software developers, implemented a policy of providing holiday pay even to interns to attract skilled workers who might otherwise choose a competitor with better perks on top of a salary.

Holiday Pay For Independent Contractors and Freelancers 

The growing gig economy and the dominating culture of remote work has further complicated the holiday pay narrative, particularly for companies operating globally. Many organizations rely on freelancers and one-off project partners for various tasks. Unlike employees, freelancers are typically not entitled to holiday pay.  Their hourly rate or project fee is based on their needs and takes into account all expenses, including vacations. 

However, companies that prioritize long-term relationships with independent contractors may offer alternative forms of compensation, such as performance bonuses or increased rates, to foster loyalty and maintain a strong working relationship. When a business scales outside its home country, it’s essential for companies to clearly articulate the compensation rules and holiday-related benefits to avoid misunderstandings and ensure compliance with labor laws in regards to independent contractors.

Conclusion

In the end of the day, the decision to reward part-timers with an extra perk of holiday pay is on the company. It should be informed by the best practices, competitor analysis and the HR policy of the business. After all, holiday pay is one of the many additional benefits a business can offer its team, so the company may actually make up for a lower holiday pay with something else, e.g. paid tuition. 

Consulting with a legal labor law expert in the destination before implementing or changing compensation policies helps a business start its scaling on the right note. With the right support and resources such as EasyStaff Payroll navigating the complexities of global payroll becomes accessible to any type of companies, be it a young startup or a seasoned business.