How to Calculate Holiday Pay for Hourly Employees?

Holidays are a time for joy with loved ones. How to Calculate Holiday Pay for Hourly Employees? Meanwhile, businesses face uncertainty as not all can close on days like Christmas or Independence Day. Deciding holiday schedules and compensation adds complexity for business communities. We have built a simple and easy-to-use holiday pay rate calculator for employees.

The most common questions arise for overpaying non-working employees or who are compensating those working on holidays. Hence, calculating the holiday pay varies, as employers have options. Holiday pay can be a gift, letting hardworking employees rest without financial worry. 

EASY Tool: Hourly pay calculator

What is the Holiday Salary?

This vacation day wage compensates you for working or not on public (international) holidays. Many companies offer this Pay as a gesture, allowing you to enjoy holidays without losing income. This approach enhances your satisfaction, strengthens employer-employee relationships, and aids retention. 

How to Calculate Holiday Pay for Hourly Employees?

Though you’re willing to calculate holiday pay for hourly, that depends on local regulations. It’s often 1.5 times the average pay in the US, meaning regular Pay plus half the standard rate per holiday work hour. Some companies provide holiday bonuses or paid time off. While US law doesn’t mandate holiday pay, it’s common to provide Pay on specific holidays and federal holidays:

  • Christmas Evening Off
  • Independence Day 
  • Labor’s Day Vacation
  • Thanksgiving Day
  • Easter
  • George Washington’s birthday
  • Veterans Vacation
  • New Year’s Celebration
  • Memorial Day
  • Black Friday Vacation (The day after Thanksgiving) 
  • Columbus Eve Vacation
  • Martin Luther King Jr. Day

CHECK: What Is 23000 A Year Hourly?

How can you calculate Holiday Salary for Hourly Workers?

Holiday pay is typically the same as employees’ regular Pay, but exceptions can arise based on company policies.


Suppose you work more hours than usual during holidays. You usually receive standard overtime pay in accordance with labor laws. For example, in India, overtime hours require double the average hourly pay rate.

1.5 Times Salary:

Although not legally required, some US businesses offer 1.5 times the wage on specific holidays. This wage is to boost your morale.


Employers have the option to acquire rewards during holidays. In India, it’s common to offer paychecks to employees and bonus gifts during Diwali. Bonus criteria may include base salary, years of service, or performance.

However, there are no exclusive regulations governing the holiday’s salaries. Federal and State employment laws only dictate the days off. 

How can you calculate Holiday Salary for Hourly Workers?

SEE ALSO: How to Calculate Hourly Rate from Salary?

Holiday pay rate calculator: Holiday Salary Calculation

Employees Receiving Pay on their Day Off

You can start by calculating the hourly Pay based on the previous month’s Salary and hours worked. 

The last month’s Pay is divided by the hours worked, which will give your per-hour Salary.

Per Hour Salary = Your Last Month’s Salary / Hours Worked

 After calculating the hourly Pay, you can now determine the unworked hours on the day off. In this way, calculate the corresponding Pay.

Holiday Salary = Per Hour Salary× Unworked Hours on Off-Day

This calculation applies to companies that compensate employees for day-offs without requiring them to work

Holiday Salary Calculation

Workers Receiving Extra Pay for Working on their Day Off

Workers are proficient to gain the extra holiday charges by performing their duties on holidays. It’s often at double or time-and-a-half rates. Here are the calculation steps:

1st Step: This approach of computing the holiday salary is the usual way where you’re paid for your working hours. It can be achieved by dividing your previous month’s Salary by the hours you’ve worked that month.

Normal Hourly Salary= Last Month’s Salary / Worked Hours of Last Month

You can calculate holiday pay by your eligible hours and hourly Pay. Thus, multiply total eligible hours by 2 (double time) and 1.5(time and a half) per employer agreement.

Holiday Pay= Normal Hourly Salary × Hours Worked on Day Off × 2 or 1.5 

For Instant

In July 2023, Arjun received a monthly salary of $8,000 while working six hours daily at an auto mechanic company. However, in August, a government holiday fell in the 3rd week. So, he’s granted holiday pay for that day. What is the holiday pay amount?

You can calculate his normal per-hour Pay. Though you need to Let’s first determine the total work hours in the previous month.

Number of Work Hours in July 2023= 31 days × 6 hours/day

= 186 hours

You may move to the next step;

Standard per Hour Salary = Salary of the previous month / Holiday’s Working Hours Payment of that month 

Normal Per Hour Pay = 8,000 / 186

= $43.01 per Hour

Hence, No. of hours he didn’t work on the day off = 6 hours 

Holiday Salary = Hourly Pay × Hours not Worked on Day Off

= 43.01 × 6 = $258.06

Holiday Salary Calculation

What are the Eligibility Criteria for Holiday Salary?

Holiday pay eligibility is typically not tied to whether salaried or hourly paid employment status. So both they are qualified for annual or local holidays. 

While regular pay rates are accessible, they offer higher Pay on specific holidays. Extra benefits like bonus checks or paid time off are expected. 

The organizations treat hourly employees as they pay their full-time workers. Hence, the holiday pay reflects kindness to employees, though exceptions also exist.

Such as Indian retail stores see high holiday demand. Meanwhile, they may prefer the unique bonuses over complex hourly holiday pay calculations like Eid, Holi, and Diwali.

Advantages of Providing Holiday Pay to Hourly Employees

Overtime Motivation

The holiday pay, such as 1.5 times rates, motivates employees to work on holidays, especially applicable to sectors like retail.

Enhance Productivity 

Fair compensation through holiday pay boosted the appreciation and engagement of employers. It’s ultimately encouraging productivity. This approach builds trust, enhances the employer brand, and cultivates a positive work atmosphere.

Paid Time Off

Paid holidays decrease the employee’s stress. It adds productivity and enhances employees’ mental well-being. These employees contribute positively to the business.

Vacation Flexibility

If companies pay the holidays salary, workers can spend the best family time and go outside to celebrate their vacation.

Recognition and Motivation

Holiday pay is a demonstration of gratitude for employees’ dedication, even on days when many choose not to work. It serves as a component of the company’s benefits package, attracting top-tier talent.

Therefore, by offering holiday pay, employers perform their duties eagerly, provide appreciated work time, and attract strong candidates as well.

Advantages of Providing Holiday Pay to Hourly Employees : Recognition and Motivation

Final Thoughts

You must understand the main factors in calculating hourly employees’ holiday pay. Once you go through the actual computation process, you can analyze how this payment ensures fair compensation for employees. It brings a positive attitude and productive environment from the dedicated employees of their relevant companies. 


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