I am feeling I am missing something obvious, help me out:<p>In a white collar / non-hourly job, how much should an employee receive for forfeiting a holiday (holiday buy-back) ?<p>Assuming (for 2024):
- working all weekdays : 234 days
- except 8 bank holidays
- except 20 days of holidays a year, all taken in June
- except all week ends : 104 days<p>The annual salary is 100k and is paid in equal monthly installments.
It is obvious that monthly pay is not directly connected to how many work days happen in the month, or even how many days in the month.
Eg the same amount is paid in January and February, even though Feb is shorter.<p>We can therefore assume the annual salary is paid in compensation for the amount of work produced during the year.
It is only divided in monthly installments for convenience.<p>The amount of labour / output that is being compensated for (by the 100k salary) happens in the 234 worked days.
It would seem logical that the company is willing to pay 100k/234 for each worked day.<p>However, the calculation for one extra day provided by companies running a holiday buy-back scheme looks like:
- annual salary : 100k
divided by
- (number of worked days) + (number of bank holidays) + (number of vacation days) : 262 days<p>This only makes sense if somehow our holiday time is also dedicated to the fulfillment of our job, eg resting to be more productive when we return to work.
But why doesn't this also apply to the week ends, since we are then also expected to relax, in order to be productive again on Monday ?<p>---<p>Pushing it to a ridiculous extreme scenario, to emphasise the logic:
- if an employee is so ridiculously productive that the company is willing to give them 250 days of holiday per year
- meaning they accomplish all their work in 4 days
- get paid their annual salary of 100k in monthly installments as usual
- and take 250 days of holiday
- 8 bank holidays
- 104 weekend days<p>Wouldn't this employee demand much more than 100k/262, if they are willing to work an extra day in the year ?
Since they would theoretically contribute 25% more output ?<p>I feel I am missing something simple here :)<p>https://imgur.com/a/T5712Hi
> We can therefore assume the annual salary is paid in compensation for the amount of work produced during the year. It is only divided in monthly installments for convenience.<p>This isn’t quite how I think about it. You’re provided an annual salary in order to be an employee of the company for the year. And since you’re not on the clock, the company is trusting you to perform some expected amount of work over the course of the year. They’re not paying you for your time so much as your loyalty.<p>To counter your 250 days of vacation example, some companies offer unlimited vacation to salaried employees. This isn’t a hypothetical: some companies advertise unlimited PTO because they trust that their employees will work in the company’s interest over the course of the time that they’re receiving a salary.
> <i>Wouldn't this employee demand much more than 100k/262, if they are willing to work an extra day in the year ? Since they would theoretically contribute 25% more output ?</i><p>Yes, 25% more.<p>If someone works only 4 days per year, s/he will be called a "consultant" instead of an "employee". And if the company wants 5 days intead of 4, they will have to pay 25% more.