We have a similar situation and we use the hourly method, at the beginning of the year staff are told how many hours they have for the year. Then they can choose which days to take it. It gets far too complicated otherwise, eg. if they work 4 hours on a Monday and 8 on a friday and worked the holiday out in days clearly they couldn't take all their holiday as Fridays.
Business Link have a great calculator which I use, it works out all the part year stuff in one click
You can find it at: Calculate your employees' holiday entitlement | Business Link
As for the wording in the contract, this is the wording from Business Link's standard statement of employment:
You are entitled to 119 hours holiday per year. |
This includes public holidays.
You will occasionally be required to work public holidays.
Your holiday year begins on 1st January.
Unused entitlement may not be carried forward to the next holiday year.
Well that's from one of ours, you can adjust the bits about when the leave year starts etc.
One other thing, you can restrict when employees take holiday, so fr example, we do not allow any annual leave to be taken during December. You can also require things like at least twice the length of notice as the holiday being requested, but I suspect these can be covered in a leave policy without having to be specified in a contract (but you should probably check that if its important for your business).