How Many Working Days for Calculating Allowances?

Why the number of working days matters

When employers calculate allowances, deductions or benefits, they often need to work out a daily rate. The figure used for this calculation can make a real difference to the final amount, yet many people are unsure which number applies in different situations.

Two figures appear regularly: 365 and 260. The number 365 covers every calendar day, while 260 reflects a standard five day working week across the year. Each serves a different purpose, and the choice between them can affect both employer and employee.

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Where 365 and 260 come from

The number 365 simply reflects the days in a calendar year. Some allowances, particularly those linked to annual salary or statutory calculations, use this figure because it treats every day equally regardless of working patterns.

The number 260 represents approximate working days in a year before accounting for leave. The maths is straightforward: 52 weeks multiplied by five working days gives 260. This excludes weekends but does not account for bank holidays or annual leave. Once you subtract typical UK bank holidays, actual working days fall closer to 252 or 253. Some calculations round up to 261, though 260 remains the more common standard.

In many cases, using 260 might align more closely with typical working patterns, as most employees work a five day week. However, part time staff, those on variable hours or workers covered by sector specific agreements may need different approaches entirely.

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Which figure should employers use

While no single rule applies across all contexts, statutory guidance provides clear rules for specific entitlements. The correct figure depends on what you are calculating and, in some cases, what your employment contracts or collective agreements specify.

• Statutory sick pay follows specific government formulas set out on GOV.UK, so employers should check the current guidance rather than assuming either figure applies.
• Pro rata holiday entitlement is usually based on working days or hours rather than calendar days.
• Salary deductions for unpaid absence might use 260 to reflect actual working days, though some employers divide by 365 for simplicity.
• Benefits in kind valuations sometimes follow HMRC guidance, which may specify a particular method.

Employers should check their contracts, collective agreements and policies to see which approach they have adopted. Consistency matters: using different methods for similar calculations can cause confusion and potential disputes.

Getting the calculation right

Whichever figure an employer uses, the approach should be clearly documented in employment contracts or staff handbooks. This helps avoid misunderstandings when questions arise about pay adjustments or entitlements.

If you are unsure which method applies to a specific benefit or deduction, check the relevant statutory or company specific guidance. GOV.UK provides details on statutory calculations, and ACAS offers practical advice on workplace policies. For complex situations, speaking to a payroll professional or HR adviser can help ensure calculations are fair and legally compliant.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Salary Sacrifice Calculator lets you see how a salary sacrifice scheme, such as pension, cycle to work or an electric car, affects your take-home pay and the tax and National Insurance you save. Try it now →