How To Calculate Holiday Pay Uk

Calculate your statutory holiday entitlement and pay accurately under UK employment law

Comprehensive Guide: How to Calculate Holiday Pay in the UK (2024)

Understanding how to calculate holiday pay correctly is essential for both employers and employees in the UK. The rules can be complex, especially for workers with irregular hours, part-time employees, or those who receive commission or overtime. This expert guide explains everything you need to know about UK holiday pay calculations, including statutory entitlements, special cases, and recent legal updates.

1. Statutory Holiday Entitlement in the UK

Under the Working Time Regulations 1998, almost all workers in the UK are legally entitled to:

• 5.6 weeks of paid holiday per year (known as statutory leave entitlement)
• This is equivalent to 28 days for someone working 5 days a week
• Bank holidays can be included in this entitlement (England and Wales have 8, Scotland has 9)
• Part-time workers receive pro-rata entitlement based on their working hours

Working Days per Week	Statutory Holiday Entitlement (days)	Statutory Holiday Entitlement (hours)
1 day	5.6 days	7.7 hours (based on 7.7hr day)
2 days	11.2 days	15.4 hours
3 days	16.8 days	23.1 hours
4 days	22.4 days	30.8 hours
5 days	28 days	38.5 hours
6 days	33.6 days	45.2 hours

2. How Holiday Pay is Calculated

The calculation method depends on your working pattern:

For workers with fixed hours and pay:

Holiday pay is calculated based on your normal weekly pay. If you work fixed hours for a fixed salary, your holiday pay will typically be the same as your normal pay for the days you’re on holiday.

For workers with variable hours/pay (including zero-hours contracts):

Since April 2020, holiday pay must be calculated based on your average pay over the previous 52 weeks (or however many weeks you’ve worked if less than 52). This is known as the “holiday pay reference period”.

The calculation is:

1. Add up all pay received in the reference period (excluding any weeks not worked)
2. Divide by the number of weeks worked to get the average weekly pay
3. Divide by the number of normal working days per week to get the daily rate
4. Multiply by the number of holiday days taken

For workers with regular overtime, commission or bonuses:

Following several important court rulings (including Bear Scotland v Fulton and Lock v British Gas), UK law now requires that:

• Regular, non-guaranteed overtime must be included in holiday pay calculations
• Commission payments that are “intrinsically linked” to the performance of tasks must be included
• Some regular bonuses may also need to be included
• This applies to the first 4 weeks of holiday entitlement (derived from EU law)

3. Special Cases and Exceptions

Part-time Workers

Part-time workers should not receive less holiday pro-rata than full-time workers. The calculation should be:

(Number of days worked per week ÷ 5) × 28 = Holiday entitlement

Workers with Irregular Hours

For workers without normal working hours (like some zero-hours contract workers), holiday entitlement accrues at a rate of 12.07% of hours worked. This is calculated as:

(5.6 weeks ÷ 46.4 weeks) × 100 = 12.07%

The 46.4 weeks accounts for the 5.6 weeks of holiday entitlement.

Agency Workers

Agency workers are entitled to the same holiday rights as permanent employees after 12 weeks in the same role (under the Agency Workers Regulations 2010). Their holiday pay should be calculated based on their average pay over the previous 12 weeks.

Workers Starting or Leaving Partway Through the Year

For workers who haven’t completed a full holiday year, holiday entitlement is calculated pro-rata. The formula is:

(Months worked ÷ 12) × 28 = Pro-rata entitlement

For example, someone working for 6 months would be entitled to 14 days holiday (6/12 × 28).

4. Recent Legal Developments (2023-2024)

Several important changes have affected holiday pay calculations:

• Holiday Pay Reference Period: Extended from 12 to 52 weeks in April 2020 to account for seasonal variations in pay
• Irregular Hours Workers: New regulations in 2023 clarified that holiday entitlement for irregular hours workers accrues at 12.07% of hours worked
• Rolled-up Holiday Pay: Previously banned, this practice (where holiday pay is included in hourly rates) has been reintroduced for irregular hours workers from April 2024, with a 12.07% uplift required
• EU Law Alignment: Following Brexit, the UK has maintained alignment with EU case law on holiday pay for the first 4 weeks of leave

Year	Legal Change	Impact on Holiday Pay
2014	Bear Scotland v Fulton ruling	Non-guaranteed overtime must be included in holiday pay for first 4 weeks
2015	Lock v British Gas ruling	Commission must be included in holiday pay calculations
2020	Reference period extended to 52 weeks	More accurate calculation for workers with variable pay
2023	Irregular hours workers regulations	12.07% accrual rate introduced for irregular hours workers
2024	Rolled-up holiday pay reintroduced	Allowed for irregular hours workers with 12.07% uplift

5. Common Mistakes to Avoid

Many employers make errors when calculating holiday pay. Here are the most common mistakes:

1. Not including overtime: Failing to include regular non-guaranteed overtime in holiday pay calculations for the first 4 weeks of leave
2. Using basic pay only: Not accounting for commission, bonuses or other regular payments that form part of “normal remuneration”
3. Incorrect reference period: Using less than 52 weeks of pay data for workers with variable hours/pay
4. Miscalculating part-time entitlement: Not giving part-time workers pro-rata entitlement equivalent to full-time workers
5. Ignoring bank holidays: Assuming bank holidays are in addition to the 28 days rather than included within it
6. Incorrect pro-rata for starters/leavers: Not calculating entitlement correctly for workers who join or leave partway through the year
7. Not paying for untaken holiday: Failing to pay for accrued but untaken holiday when employment ends

6. Practical Examples

Example 1: Full-time worker with fixed pay

Scenario: Sarah works 5 days a week, 8 hours per day at £12/hour. She takes 5 days holiday.

Calculation:

• Daily pay = 8 hours × £12 = £96
• Holiday pay = 5 days × £96 = £480

Example 2: Part-time worker with variable hours

Scenario: James works 3 days a week (Tuesday, Wednesday, Thursday), 6 hours per day at £11/hour. Over the last 52 weeks, he worked 48 weeks (taking 4 weeks holiday) and earned £15,840.

Calculation:

• Average weekly pay = £15,840 ÷ 48 = £330
• Daily rate = £330 ÷ 3 = £110
• For 5 days holiday: 5 × £110 = £550

Example 3: Worker with overtime and commission

Scenario: Emma works 4 days a week at £10/hour (8 hours/day). She regularly works 4 hours overtime per week at £15/hour and earns £200 commission per week. She takes 4 days holiday.

Calculation (for first 4 weeks):

• Basic pay = 4 × 8 × £10 = £320
• Overtime pay = 4 × £15 = £60
• Total weekly pay = £320 + £60 + £200 = £580
• Daily rate = £580 ÷ 4 = £145
• Holiday pay = 4 × £145 = £580

7. What to Do If Your Holiday Pay Is Wrong

If you believe your holiday pay has been calculated incorrectly:

1. Check your contract: Review your employment contract and company holiday policy
2. Request a breakdown: Ask your employer for a detailed breakdown of how your holiday pay was calculated
3. Compare with colleagues: Discreetly compare your holiday pay with colleagues in similar roles
4. Use this calculator: Input your details to check what you should be receiving
5. Raise a grievance: If there’s a discrepancy, raise a formal grievance with your employer
6. Seek advice: Contact ACAS or Citizens Advice for free, impartial advice
7. Consider legal action: For persistent issues, you may need to make a claim to an employment tribunal (must be within 3 months of the underpayment)

8. Frequently Asked Questions

Can my employer include bank holidays in my 28 days entitlement?

Yes. There’s no legal right to paid bank holidays – your employer can choose to include them within your 28 days statutory entitlement.

Do I accrue holiday while on sick leave?

Yes. You continue to accrue holiday entitlement while on sick leave. You can also request to take holiday while on sick leave (though your employer can refuse this).

What happens to my holiday when I leave my job?

You should be paid for any accrued but untaken holiday when your employment ends. This is calculated pro-rata based on the portion of the holiday year you’ve worked.

Can my employer pay me instead of giving me holiday?

Generally no – the law states that workers must take their statutory holiday entitlement. The only exception is when employment ends, when you should be paid for any untaken holiday. However, from April 2024, “rolled-up” holiday pay is permitted for irregular hours workers.

Does maternity leave affect my holiday entitlement?

No. You continue to accrue holiday during maternity leave (and other types of family leave) in the same way as when you’re working.

Can my employer set when I take my holiday?

Your employer can require you to take holiday at specific times (e.g., during a Christmas shutdown), but they must give you notice that’s at least twice as long as the holiday period they’re requiring you to take.

Important Disclaimer: This calculator and guide provide general information only. They don’t constitute legal advice and shouldn’t be relied upon as such. Holiday pay calculations can be complex, especially for workers with irregular patterns. For specific advice about your situation, consult a qualified employment law professional or contact ACAS.