Holiday Pay and Entitlement for UK Employers
For UK employers: almost every worker is entitled to 5.6 weeks of paid holiday a year, but working out how much leave someone gets and how much to pay them is where small businesses go wrong. This guide covers full-time, part-time and irregular-hours staff, the 12.07% accrual method, rolled-up holiday pay and what "normal pay" really means.
Key takeaways
- Most workers are entitled to 5.6 weeks of paid holiday a year, which is 28 days for someone working 5 days a week. Bank holidays can be included in this.
- Part-time workers get the same 5.6 weeks, worked out in proportion to the days or hours they work.
- For irregular-hours and part-year workers, in leave years starting on or after 1 April 2024, holiday can accrue at 12.07% of hours worked, and rolled-up holiday pay is allowed.
- Holiday pay should reflect normal pay, which can include regular overtime and commission, not just basic pay.
Holiday entitlement sounds like one of the simpler parts of employing people. Then you hire a part-timer who works three days one week and five the next, a weekend worker who only works in summer, or a salesperson whose pay is mostly commission, and the simple rule stops being simple. Errors in holiday pay are common, and they can build up over years into claims for arrears.
This guide walks through the rules UK employers need, from basic entitlement to the method for irregular-hours workers. It is general information, not legal advice. Holiday pay law has changed several times in recent years and detailed points can depend on your contracts, so check GOV.UK, Acas or a qualified employment adviser before relying on any calculation.
The basic entitlement: 5.6 weeks
Most workers in the UK, including part-time staff, agency workers and those on zero-hours contracts, are entitled to 5.6 weeks of paid holiday each leave year. For someone who works 5 days a week, that is 28 days. Employers can choose to include the 8 usual bank holidays in England and Wales within that 28 days, or give them on top. There is no legal right to have bank holidays off as paid leave in addition to the 5.6 weeks; that depends on the contract.
Statutory entitlement is capped at 28 days, so someone who works 6 days a week still gets 28 days of statutory leave. You can always offer more than the legal minimum as a benefit, and many employers do.
Part-time workers
Part-time workers with fixed hours get the same 5.6 weeks, calculated in proportion to the time they work. Multiply the number of days they work each week by 5.6. Someone who works 3 days a week is entitled to 16.8 days a year. You can round up, but you cannot round down.
Bank holidays need care for part-timers. If your business closes on bank holidays and you deduct them from leave, part-timers who do not normally work Mondays could end up with fewer days to choose for themselves than full-timers in proportion. A fair approach is to give everyone a pro rata share of bank holidays rather than leaving it to which days they happen to work.
Example
Imagine Anna works Tuesday to Thursday, 3 days a week, at a small accountancy practice. Her statutory entitlement is 3 times 5.6, which is 16.8 days. Her employer rounds this up to 17 days and treats bank holidays as part of it on a pro rata basis, so Anna's leave is fair compared with a colleague who works Monday to Friday. The name and figures are made up.
Irregular-hours and part-year workers
For workers whose hours vary a lot, the "days per week" approach does not work. Since leave years beginning on or after 1 April 2024, there is a specific method for two groups:
- Irregular-hours workers: those whose paid hours are wholly or mostly variable in each pay period, such as many zero-hours staff.
- Part-year workers: those who work only part of the year and have periods of at least a week in which they are not required to work and are not paid, such as some seasonal or term-time staff.
Check the GOV.UK definitions to see whether a particular worker fits, because the method only applies to those groups.
The 12.07% accrual method
For these workers, holiday can accrue at 12.07% of the hours they work in each pay period. The figure comes from 5.6 weeks of holiday divided by the 46.4 weeks a full-year worker actually works. In practice, each pay period you record the hours worked and add 12.07% of them to the worker's leave balance.
- Identify which workers qualify as irregular-hours or part-year under the GOV.UK definitions.
- Record hours worked accurately in each pay period.
- Calculate accrued leave as 12.07% of those hours and add it to the worker's balance.
- Let workers take the leave they have built up, and pay it at the right rate.
- Keep records of hours, accrual and leave taken.
Example
For example, Ravi is on a zero-hours contract at a small events company. In one month he works 80 hours. His accrued holiday for that month is 80 multiplied by 12.07%, which is about 9.7 hours. Over the year, his leave balance reflects what he actually worked. These figures are made up for illustration.
Rolled-up holiday pay
For irregular-hours and part-year workers in leave years beginning on or after 1 April 2024, employers can choose to use rolled-up holiday pay. Instead of paying workers when they take leave, you add an amount equal to 12.07% of their pay to each payslip. The holiday pay must be shown as a separate item on the payslip, and workers should still be able to take time off.
Rolled-up holiday pay is simpler to administer for some businesses, but it is not allowed for regular workers. If you use it, make sure it is set up correctly in payroll and explained clearly to staff.
Common mistake
Using the 12.07% method or rolled-up pay for staff who have regular hours. These options are designed for irregular-hours and part-year workers. Applying them to someone on a fixed three-day week could leave them short, and rolled-up pay for regular workers is not permitted.
How much to pay: "normal pay"
When a worker takes holiday, they should usually receive the pay they would normally get. For someone on a fixed salary or fixed hours with no extras, that is straightforward: their normal weekly pay.
For workers whose pay varies, the law is more complex. Holiday pay should reflect normal pay, and for the 4 weeks of leave that came from EU law, that can include regular overtime, commission and certain other payments, not only basic pay. The remaining 1.6 weeks can be treated differently. Where pay varies from week to week, holiday pay is generally based on an average over a reference period of past weeks, with rules on which weeks to count.
| Type of payment | Usually include in holiday pay? |
|---|---|
| Basic pay | Yes |
| Regular overtime | Generally yes, for the EU-derived 4 weeks |
| Commission linked to work done | Generally yes, for the EU-derived 4 weeks |
| Genuinely occasional, one-off payments | Often not, but check the guidance |
| Expenses | No |
Because the details depend on what each payment is for and how regularly it is paid, check GOV.UK guidance or take advice if your staff earn significant overtime or commission.
Pro tip
If your payroll software calculates holiday pay automatically, check what it includes. Some setups only use basic pay by default. A quick test with one worker who earns regular overtime will show whether your holiday pay reflects normal pay.
Booking, carrying over and leaving
Booking holiday
You can set reasonable rules about when holiday is taken, such as notice periods, busy-season blackout dates or a business closure over Christmas. Put these rules in writing, usually in your employee handbook, and apply them consistently.
Carrying over leave
Workers should generally take their leave in the year it is earned. In some situations, such as sickness or family leave, workers may be able to carry leave over. Contracts can also allow carry-over of extra contractual leave. Check GOV.UK for the current carry-over rules.
When someone leaves
When employment ends, the worker should be paid for any statutory holiday they have accrued but not taken. If they have taken more than they accrued, you can only recover the overpayment if the contract or a written agreement allows it.
Holiday pay checklist
- Confirm every worker's entitlement: 5.6 weeks, pro rata for part-timers
- Decide and write down how bank holidays are treated
- Identify irregular-hours and part-year workers using the GOV.UK definitions
- Apply 12.07% accrual only to those workers
- Decide whether to use rolled-up holiday pay for them, and show it separately on payslips
- Check that holiday pay includes regular overtime and commission where required
- Set clear booking rules in your handbook
- Pay accrued, untaken leave when someone leaves
- Keep records of entitlement, leave taken and pay
Frequently asked questions
Can I pay workers instead of letting them take holiday?
Generally not for the statutory 5.6 weeks while employment continues. Workers should take the leave. Payment in lieu is normally only for untaken leave when employment ends, apart from rolled-up holiday pay for eligible irregular-hours and part-year workers.
Do zero-hours workers get holiday?
Yes. Workers on zero-hours contracts are entitled to paid holiday. Many will be irregular-hours workers, so the 12.07% accrual method and rolled-up holiday pay may be options. Check the definitions on GOV.UK.
Do I have to give bank holidays off on top of 28 days?
No. Bank holidays can be included in the 5.6 weeks. Whether staff get them in addition depends on their contract.
Should overtime be included in holiday pay?
Regular overtime and commission generally should be included for the 4 weeks of EU-derived leave. Occasional or one-off payments may be treated differently. Take advice if overtime or commission is a big part of pay.
Related reading
The bottom line
Most UK workers are entitled to 5.6 weeks of paid holiday, worked out pro rata for part-timers. For irregular-hours and part-year workers, 12.07% accrual and rolled-up holiday pay are available, and holiday pay should reflect normal pay, including regular overtime and commission where the rules require it.
Write your rules down, check what your payroll software includes, and review your approach whenever your workforce changes. If you are unsure about a particular worker or payment, check GOV.UK or ask Acas or an adviser before errors build up.
