Guidance

Holiday pay and entitlement reforms from 1 January 2024

Updated 1 April 2024

This guidance sets out the changes to the Working Time Regulations which the government introduced on 1 January 2024.

It does not provide definitive answers to all individual queries. It is not intended to be relied upon in any specific context or as a substitute for seeking advice (legal or otherwise) on a specific circumstance, as each case may be different. If employers introduce changes to terms and conditions, they must seek to reach an agreement with their workers or their representatives. 

The guidance focuses on the legal minimum entitlement of 5.6 weeks’ paid holiday. Many workers will have contracts entitling them to additional paid holiday beyond the statutory minimum. This additional holiday is known as contractual holiday entitlement. Individual contracts should be checked first, and if necessary, independent legal advice sought.

All the illustrative holiday pay calculations provided in this guidance use gross pay data (before any taxes or deductions).

All references to ‘worker’ refer to all individuals whose employment status is either as a ‘worker’ or an ‘employee’, meaning they are entitled to paid holiday. Visit employment status for further information on employment status and definitions.

Before reading this guidance, you should check the guidance on holiday entitlement. This explains how to calculate holiday entitlement and pay for the majority of workers.

1. Introduction

The government has introduced reforms to simplify holiday entitlement and holiday pay calculations in the Working Time Regulations.

These changes include:

• defining irregular hours workers and part-year workers in relation to the introduction of the holiday entitlement accrual method and rolled-up holiday pay (see section 2)
• introducing a method to calculate statutory holiday entitlement for irregular hours and part-year workers (see section 3.1)
• introducing a method to work out how much leave an irregular hour or part-year worker has accrued when they take maternity or family related leave or are off sick (see section 3.3)
• removing the Working Time (Coronavirus) (Amendment) Regulations 2020 which affect the accrual of COVID-19 carryover of leave
• maintaining the current rates of holiday pay where 4 weeks is paid at normal rate of pay and 1.6 weeks paid at basic rate of pay, whilst retaining the 2 distinct pots of leave (see section 6.1)
• defining what is considered ‘normal remuneration’ in relation to the 4 weeks of statutory annual leave (see section 6.1)
• introducing rolled-up holiday pay as an alternative method to calculate holiday pay for irregular hours workers and part-year workers (see section 6.2)

Note that the following reforms will only apply to leave years beginning on or after 1 April 2024:

• introducing a method to calculate statutory holiday entitlement for irregular hours and part-year workers (see section 3.1)
• introducing a method to work out how much leave an irregular hour or part-year worker has accrued when they take maternity or family related leave or are off sick (see section 3.3)
• introducing rolled-up holiday pay as an alternative method to calculate holiday pay for irregular hours workers and part-year workers (see section 6.2)

2. Definition of an irregular hour worker and a part-year worker

A definition for irregular hours workers and part-year workers has been set out in regulations. This is so that employers know which workers the accrual method for entitlement and the introduction of rolled up holiday pay apply to.

How a worker is classified will depend on the precise nature of their working arrangements. We would encourage employers to ensure that working patterns are clear in their workers’ contracts.

The government has defined irregular and part-year as the following.

Note: a pay period is how frequently a worker gets paid, for example, monthly.

2.1 Irregular hours worker

A worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.

Examples 

• Kevin, a hospitality worker who works a different number of hours each week.

Kevin would qualify as an irregular hours worker if his contract says that the hours he works will be wholly or mostly variable in each pay period. Kevin’s contract could be a ‘casual’ contract, otherwise known as a zero-hours contract. Find more information on zero hour contracts. 

• Paul, who has a rotating 2-week shift pattern where he works 15 hours in week 1 and 20 hours in week 2. He does not work overtime.

Paul would not qualify as an irregular hours worker if his contracted hours are fixed during both week 1 and week 2. Given that Paul does not work overtime, it is not the case that his hours worked are wholly or mostly variable. Instead, Paul’s hours are fixed (just worked in a rotating shift pattern).

2.2 Part-year worker

A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid. This includes part-year workers who may have fixed hours.

Examples 

• Melanie, a seasonal worker in the farming industry who only works and gets paid during spring and summer months.

Melanie would qualify as a part-year worker if her contract reflects that there are periods of time that last more than a week when she is not contracted to work and does not receive pay. 

The regulations require that there must be a period of at least one week ‘for which they are not paid’ which means that it would still be possible for a worker to be paid ‘during’ that period so long as there is no expectation of them working in that period and nor are they receiving payment ‘for’ that period.

3. Holiday entitlement for irregular hours workers and part-year workers

3.1 How statutory holiday entitlement is accrued

For workers who are not irregular hours or part-year workers, there is no change in how their statutory holiday entitlement is accrued. The method remains so that in the first year of employment, workers receive one twelfth of the statutory entitlement on the first day of each month. After the first year of employment, a worker gets holiday entitlement based upon their statutory and contractual entitlement. Their entitlement will be based upon the proportion of a week which they are contracted to work. This is known as ‘pro-rating’.

For leave years that begin before 1 April 2024, holiday entitlement will continue to be calculated in the same way for irregular hours and part-year workers. Use the holiday entitlement calculator to work out entitlement.

For leave years beginning on or after 1 April 2024, there is a new accrual method for irregular hour workers and part-year workers in the first year of employment and beyond. Holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period.

Example of how statutory holiday entitlement is accrued

Jill works irregular hours and is paid monthly. Her leave year started on 1 April 2024. She is entitled to the statutory minimum holiday entitlement only.

In June, she works 68 hours. To work out how much holiday she accrues in June, you will need to calculate 12.07% of 68 hours.

Table 1: calculation of statutory holiday accrual for irregular hours and part-year workers

Step	Calculation method	Example
1	Divide the hours worked in pay period by 100	68 ÷ 100 = 0.68
2	Multiply the answer to Step 1 by 12.07	0.68 x 12.07 = 8.2076
3	Round up or down to the nearest hour	8.2076 becomes 8

Answer: Jill accrues 8 hours of holiday during the month of June.

Note: the hours can be rounded down (to zero if it is less than 30 minutes) but will be rounded up to one hour if it is 30 minutes or more than 30 minutes.

The 12.07% figure is based on the fact that all workers are entitled to 5.6 weeks’ leave. This means that a worker’s total working weeks in a year is 46.4 (52 weeks in a year minus 5.6 weeks of leave). 12.07% of 46.4 is 5.6.

This figure is based on the statutory minimum holiday entitlement (5.6 weeks). An irregular hour or part-year worker may be entitled to more than the minimum, if this is specified in their contract.

To find the relevant percentage for these workers, you would need to do the following calculation: (total holiday entitlement ÷ remaining working weeks in the year) x 100.

For example, if a part-year worker is entitled to 6 weeks of leave as per their contract, then:

6 ÷ 46 = 0.1304

0.1304 x 100 = 13.04

Therefore, this worker’s holiday entitlement would be calculated as 13.04% of actual hours worked in a pay period.

The accrual method to work out entitlement will apply to an agency worker if the agency worker’s arrangements fall within the meanings of both a ‘worker’ (as already defined) and either an ‘irregular hours worker’ or a ‘part-year worker’, as per the new definition in the Working Time Regulations.

An agency worker who is a ‘worker’ but not an ‘irregular hours worker’ or a ‘part-year worker’, will continue to accrue leave at one twelfth of their entitlement at the start of each month during their first year of employment.

Statutory paid holiday entitlement is limited to 28 days. For example, staff working 6 days a week are only entitled to 28 days’ paid holiday.

If an irregular hours/ part-year worker is paid weekly and works 4 hours a week or less, then it may be appropriate for the employer to round up to the next half hour or hour to ensure  the worker accrues holiday entitlement.

3.2 Hours worked per week

Where workers work a fixed number of hours each week but not the same number of hours each day, the legislation does not state how to incorporate the 28-day statutory cap when calculating their full annual leave entitlement. In our view it is appropriate to incorporate the cap as 28 days of the worker’s average working day.  

Therefore, statutory leave entitlement should be calculated in days, and then multiplied by the average length of the working day.

The average working day is defined as:

Average working day = hours worked per week ÷ days worked per week.

Example of calculating holiday entitlement when on fixed hours

Irene works a total of 30 hours over 4 days a week, working 9 hours on Monday and Wednesday and 6 hours on Tuesday and Thursday. 

Her statutory entitlement in days is the lower of 28 days or 5.6 x 4 days (22.4 days). Therefore, Irene’s full statutory annual leave is 22.4 days. 

Her average working day is 30 hours divided by 4 days, or 7.5 hours per day. 

Therefore, Irene’s statutory holiday entitlement for a full leave year is 22.4 days x 7.5 hours = 168.0 hours a year. 

Depending on which days she takes off as leave, it will either be 6 hours or 9 hours from her total leave entitlement.

Workers who leave employment have their annual leave pro-rated based on the time that they spent in work as a proportion of the year. This is calculated based on calendar days in employment, not days spent at work.  

This is calculated in a 4-step method:  

1. Calculate the worker’s full annual leave entitlement.  

2. Work out the proportion of the leave year worked.

3. Pro-rate based on the proportion of the year worked.  

4. In our view, it is appropriate to then multiply by the average working day to convert into hours.

Example of calculating leave when worker leaves during leave year when on fixed hours

Mary has been working for her current employer for more than a year, working 45 hours a week over 4 days. Her leave year started on 1 April 2024, running until 31 March 2025 and she is leaving her role on Thursday 25 July 2024.

Table 2: calculation of entitlement for a worker who works fixed hours leaving during a leave year

Step	Method	Example
1	Calculate holiday entitlement in days.	Mary is entitled to the lower amount of 28 days or 5.6 x 4 days (22.40 days). Therefore, Mary’s full statutory annual leave entitlement is 22.4 days.
2	Calculate the proportion of leave year in employment. Days in employment during the leave year ÷ days in leave year x 100.	Between 1 April 2024 and 25 July 2024 there are 116 days. The leave year runs from 1 April 2024 to 31 March 2025. 116 ÷ 365 x 100 = 31.78 Therefore, Mary is in employment for 116 days out of 365 days in the leave year or 31.78% of the leave year.
3	Pro-rate leave based on the proportion of the leave year worked. Total holiday entitlement for the worker ÷ 100 x proportion of leave year in employment.	Mary’s leave entitlement in the leave year up until she leaves her job is 31.78% of 22.4 days. 22.4 ÷ 100 x 31.78 = 7.1 Mary’s statutory entitlement is 7.1 days.
4	Multiply by the average working day to convert into hours. Average hours worked per day = total hours worked per week ÷ days worked per week. Holiday entitlement in hours = average hours worked per day x statutory entitlement calculated in step 3.	Mary works 45 hours a week over 4 days. 45 ÷ 4 = 11.25 average hours worked per day. To convert annual leave into hours, the entitlement in days should be multiplied by the statutory entitlement. 11.25 hours x 7.1 days = 79.9

Answer: Rounded to the nearest hour, Mary’s statutory holiday entitlement in hours is 80 hours.

3.3 Calculating statutory holiday entitlement accrued by irregular hours and part-year workers while they are on maternity or family related leave or off sick

Some irregular hours and part-year workers may take maternity or family related leave or be off sick within an annual leave year. Whether a worker can take maternity or family related leave depends on their employment status. Visit employment status for further information.

Maternity or family related leave (defined as ‘statutory leave’) includes leave such as maternity leave, paternity leave, shared parental leave and adoption leave. During these absences from work, a worker would continue to accrue leave. Annual leave cannot be taken during a period of maternity leave. Some other types of family-related leave can be taken in blocks with annual leave in between. Visit holidays, time off, sick leave, maternity and paternity leave for more information.

A calculation method has been introduced for leave years beginning on or after 1 April 2024 to help employers find out how much leave is accrued by an irregular hours or part-year worker in such circumstances. The calculation method follows the same principle as the accrual method for statutory holiday entitlement outlined in section 3.1.

However, as the accrual method relies on the employer knowing how many hours someone has worked, this method introduces a 52-week relevant period so employers can look back and work out an average of hours worked across that period, to inform what period of leave should be deemed to have accrued during the period of absence.

The relevant period would run from the day before the worker starts their maternity or family related leave or time off sick, going back for 52 weeks. When calculating the average weekly hours worked, employers should not include weeks where the worker is on maternity or family related leave or off sick for any amount of time. However, weeks not worked for any other reason should be included. If the worker has not worked for the employer for 52 weeks, the relevant period is shortened to the number of weeks the worker worked for the employer.

The employer is only required to perform this calculation once per period of leave.

Tables 3 and 4 below are illustrative examples that show how the calculation can be applied in certain scenarios.

Step 1 of the calculation is to find out the average number of hours per week that the worker worked during the 52-week relevant period before the worker starts maternity/ family-related leave or sick leave. The regulations do not specify how this calculation is done for Step 1. Our view is that if a worker in this scenario has been working for their employer for over 52 weeks and if they have taken their full statutory leave entitlement in the previous leave year, then it would be appropriate for the employer to use the figure 46.4 in the calculation, (52 – 5.6 = 46.4).

This means the calculation for Step 1 would be: average number of hours worked per week = total number of hours worked ÷ 46.4. The denominator (46.4 figure) could be higher if a worker has used less than 5.6 weeks of leave in the previous leave year. For example, if a worker took only 3 weeks of leave in the previous leave year, the employer could use 49 as the divisor (52 – 3 = 49). The denominator may also be different if the worker has worked for the employer for less than a year.

Example: part-year worker on maternity leave

Harriet is a part-year worker who is entitled to the minimum 5.6 weeks statutory holiday. Over a 52-week period, she worked in 26 weeks, for a total of 1032 hours. She then took the following 40 weeks as maternity leave.

Table 3: method for calculating statutory holiday entitlement accrued by irregular hours and part-year workers while off sick or on statutory leave

Step	Method	Example
1	Calculate the average number of hours per week that the worker worked during the 52-week relevant period before the worker started the maternity or family related leave or off sick. Average number of hours worked per week = total number of hours worked ÷ 46.4 (as explained above, the 46.4 figure is a recommendation)	1032 ÷ 46.4 = 22.241 hours (rounded to 3 decimal places)
2	Calculate the number of hours of annual leave accrued per week of the maternity or family related leave or off sick. Hours of annual leave accrued per week = average number of hours worked per week ÷ 100 x 12.07	22.241 ÷ 100 x 12.07 = 2.684 (rounded to 3 decimal places)
3	Calculate the total number of hours of annual leave accrued while on maternity or family related leave or off sick. Total hours of annual leave accrued = hours of annual leave accrued per week x number of weeks of maternity or family related leave or off sick.	2.684 x 40 = 107.36
4	Round up or down to the nearest hour.	107.36 becomes 107

Answer: Harriet accrued 107 hours of holiday entitlement while on maternity leave.

Most employers will be using this calculation for workers who only take a single period of leave, such as maternity leave.

However, it is possible that some workers who are eligible may take multiple periods of maternity or family related leave or be off sick multiple times during the 52-week relevant period. For example, a worker may take maternity leave, return to work, then be off sick at some point within the next 52 weeks.

Employers will need to take into account these previous periods of maternity or family related leave or time off sick when calculating the statutory holiday entitlement accrued during subsequent periods. This may mean that the relevant period needs to go back further than 52 weeks, up to 104 weeks. If a worker has not worked with the employer for long enough and there are fewer than 52 weeks to take into account, then the relevant period is shortened to that lower number of complete weeks.

Example: part-year worker on multiple periods of maternity or family related leave or who is off sick

Sharon is a part-year worker. Over a 52-week period she worked in 39 weeks, for a total of 832 hours. She then took 19 weeks of shared parental leave.

Sharon then returned to work for 5 weeks, working 88 hours in total. She then proceeded to take a further 4 weeks of shared parental leave.

After this second period of shared parental leave, she returned to work for 6 weeks, working 108 hours. Sharon was then off sick for 3 days.

Her employer will need to calculate her statutory holiday entitlement after each of these leave periods.

Table 4: a part-year worker who takes multiple periods of maternity or family related leave or takes time off sick - first period

First period of maternity or family related leave or period off sick (19 weeks of shared parental leave for Sharon).

Step	Method	Calculation
1	Calculate the average number of hours per week that Sharon worked during the 52-week relevant period before she went on shared parental leave. To get the average hours worked per week, the employer may choose to, divide the total number of hours Sharon worked (832) by 46.4	832 ÷ 46.4 = 17.931 hours (rounded to 3 decimal places)
2	Calculate the number of hours of annual leave that Sharon accrued during each week of the shared parental leave.	17.931 ÷ 100 x 12.07 = 2.164 (rounded to 3 decimal places)
3	Calculate the total number of hours of annual leave that Sharon accrued.	2.164 x 19 = 41.116
4	Round the answer to Step 3 up or down to the nearest hour.	41.116 would be rounded down to 41.

Answer: Sharon accrued 41 hours of statutory holiday entitlement while on her first period of shared parental leave.

Table 4.1: a part-year worker who takes multiple periods of maternity or family related leave or takes time off sick - second period

Second period of maternity or family related leave or time off sick (4 weeks of shared parental leave for Sharon)

Step	Method	Calculation
1	Determine the 52-week relevant period, working backwards from the day Sharon began her second period of shared parental leave	Sharon worked a total of 88 hours in the 5 weeks before starting her second period of shared parental leave. This is included in the 52-week relevant period. Prior to this, Sharon was on shared parental leave for 19 weeks. These 19 weeks are excluded from the relevant period. The remainder of the 52-week relevant period will come from the 47 weeks prior to Sharon taking her first period of shared parental leave. During this time, she worked 756 hours.
2	Calculate the average number of hours per week that Sharon worked during the relevant period before she started her second (4-week) period of shared parental leave. Average number of hours per work worked in the relevant period = total number of hours worked during the 52-week relevant period + 46.4 (as explained above, the 46.4 figure is a recommendation)	756 + 88 = 844 total hours worked during the 52-week relevant period 844 ÷ 46.4 = 18.190 hours (rounded to 3 decimal places)
3	Calculate the number of hours of annual leave that Sharon accrued during each week of this period of shared parental leave	18.190 ÷ 100 x 12.07 = 2.196 (rounded to 3 decimal places)
4	Multiply the number of hours accrued in each week by the number of weeks of shared parental leave to find the total number of hours of annual leave that Sharon accrued	2.196 x 4 = 8.784
5	Round the answer to Step 4 up or down to the nearest hour	8.78 becomes 9 hours.

Answer: Sharon accrued 9 hours of statutory holiday entitlement while on her second period of shared parental leave.

Table 4.2: a part-year worker who takes multiple periods of maternity or family related leave or takes time off sick - third period

Third period of maternity or family related leave or sickness (3 days off sick leave for Sharon).

Step	Method	Calculation
1	Determine the 52-week relevant period, working backwards from the day Sharon went off sick.	Sharon worked a total of 108 hours in the 6 weeks before being off sick. This is included in the 52-week relevant period. Prior to this, Sharon was on her second period of shared parental leave for 4 weeks. These 4 weeks are excluded from the 52-week relevant period. Prior to her second period of shared parental leave, Sharon worked a total of 88 hours over 5 weeks. This goes towards the 52-week relevant period, which now stands at 11 weeks (6 + 5 = 11). Prior to this, Sharon was on shared parental leave for 19 weeks. These 19 weeks are excluded from the relevant period. The remainder of the 52-week relevant period will come from the 41 weeks prior to that. During this time, Sharon worked 676 hours. The 52-week relevant period is therefore made up of 41 weeks (676 hours) prior to Sharon taking her first period of shared parental leave, the 5 weeks (88 hours) she worked after that, and the 6 weeks (108 hours) that she worked between the second period of shared parental leave and being off sick.
2	Calculate the average number of hours per week that Sharon worked during the 52-week relevant period before she was off sick. Average number of hours per week worked in relevant period = total number of hours worked during the 52-week relevant period + 46.4 (as explained above, the 46.4 figure is a recommendation.)	676 + 88 + 108 = 872 hours worked in the 52-week relevant period 872 ÷ 46.4 = 18.793 hours (rounded to 3 decimal places)
3	Calculate the number of hours of annual leave that Sharon accrued during each week before she was off sick.	18.793 ÷ 100 x 12.07 = 2.268 (rounded to 3 decimal places)
4	Multiply the number of hours accrued in each week by the number of weeks off sick to find the total number of hours of annual leave that Sharon accrued.	2.268 x 3 ÷ 5 = 1.361
5	Round the answer to Step 4 up or down to the nearest hour.	1.361 becomes 1 hour.

Sharon accrued 1 hour of statutory holiday entitlement while she was off sick.

4. Leave entitlement when leaving a job part-way through a leave year

If a worker leaves their job part-way through a leave year, a calculation should be completed to check the worker has received the statutory minimum holiday entitlement to which they are entitled. Any shortfall should be paid in lieu of untaken leave. 

In such cases, statutory annual leave entitlement can be calculated as:  

Leave entitlement for full year × Proportion of leave year in employment  

This is calculated in a 3-step method:  

1. Calculate the worker’s full annual leave entitlement.  

2. Work out the proportion of the leave year in employment.

3. Pro-rate based on the proportion of the year in employment.  

Days worked per week example

Edward has been working for his current employer for more than a year, working 6 days per week. His current leave year started on 1 July 2024, ending 30 June 2025 and he is leaving his role on Saturday 16 November 2024.

Table 2: calculation of leave entitlement when leaving during leave year, based on days per week

Step	Method	Entitlement
1	Calculate the full holiday entitlement	Edward is entitled to the lower amount of 28 days or 5.6 x 6 days (33.6 days). Therefore, his full annual leave entitlement is 28 days.
2	Calculate proportion of leave year in employment Days in employment during the leave year ÷ days in leave year x 100	Between 1 July and 16 November there are 139 days. The leave year runs from 1 July 2024 to 30 June 2025. Edward is in employment for 139 days out of 365 days in the leave year. 139 ÷ 365 x 100 = 38.08 This means Edward was in employment for 38.08% of the leave year.
3	Pro-rate leave based on proportion of the leave year worked. Total holiday entitlement for the worker ÷ 100 x proportion of leave year in employment.	Edward’s leave entitlement in the leave year up until he leaves his job is 38.08% of 28 days. 28 ÷ 100 x 38.08 = 10.66

Answer: Edward’s statutory holiday entitlement is 10.7 days.

5. Carryover of leave

From 1 January 2024 the following principles relating to the carryover of annual leave apply.

Workers can normally carry over a maximum of 8 days into the next leave year, with the agreement of their employer.

If a worker gets more than 28 days’ leave, their employer may allow them to carry over any additional untaken leave. Check the employment contract, company handbook or intranet to see what the rules say.

If any worker is unable to take some or all of their statutory holiday entitlement as a result of taking a period of maternity or other family related leave, then they will be entitled to carry forward up to 28 days of their untaken leave into the following leave year.

If a worker working regular hours and all year round is unable to take some or all of their statutory holiday entitlement as a result of being off sick, then the worker will be entitled to carry forward up to 20 days of their untaken leave into the following leave year, provided it is then taken by the end of the period of 18 months starting from the end of the leave year in which it was accrued. These 20 days should be paid at the ‘normal’ rate.

An irregular hour’s worker or part-year worker will be entitled to carry over up to 28 days of leave in these circumstances. Again, this worker would need to use that leave they have carried over within 18 months starting from the end of the leave year in which it accrued.

An employer must allow a worker who is unable to take their statutory holiday entitlement as they are on maternity or other family related leave to carry over all their holiday entitlement to the following leave year.

A worker will be entitled to carry forward into the next year the leave that they should have been entitled to take if:

• the employer has refused to recognise a worker’s right to annual leave or to payment for that leave
• the employer has not given the worker a reasonable opportunity to take their leave and encouraged them to do so; or
• the employer failed to inform the worker that untaken leave will must be used before the end of the leave year to prevent it from being lost

Workers with regular hours may carry over up to 20 days of their leave, accrued but untaken for these reasons, and irregular hours or part-year workers can carry over all of their entitlement.

The above scenarios should be avoided as it is important that workers are able to take their annual leave. This is to enable workers to rest from carrying out the work they are required to do under their contract of employment.

6. Holiday pay calculations

6.1 Holiday pay rates

All full-year workers, except those who are genuinely self-employed, are legally entitled to 5.6 weeks of paid statutory holiday entitlement per year. Four weeks of this entitlement must be paid at a worker’s ‘normal’ rate of pay (as specified by Regulation 13 of the Working Time Regulations). This could include regular payments, such as overtime, regular bonuses and commission. The remaining 1.6 weeks’ entitlement can be paid at ‘basic’ rate of pay, that is, the worker’s basic remuneration (as specified by Regulation 13A).

Basic pay should reflect the worker’s wages (minus bonuses, commission and other additional payments) that they would have earned had they been working. This means that if a worker works shifts each week which are at a premium rate (due to the timings of the shifts, for example), then this should be reflected in the worker’s basic pay when they are on holiday.

The regulations do not state which entitlement (4 weeks or 1.6 weeks) should be used first. Many employers choose not to distinguish between the 2 pots of leave, and to pay the entire 5.6 weeks at the ‘normal’ rate of pay. If an employer wishes to pay different holiday rates for different periods of leave, then they should consider explaining this clearly and consistently to the worker, for example in the worker’s contract or staff handbook.

Holiday pay is based on the legal principle that a worker should not suffer financially for taking holiday. The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. Pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working.

From 1 January 2024, the components which must be included when calculating ‘normal’ rate of pay are defined in regulations.

The following payments must be included in the 4 weeks of normal (regulation 13 leave) holiday pay: 

• payments, including commission payments, intrinsically linked to the performance of tasks which a worker is contractually obliged to carry out
• payments relating to professional or personal status relating to length of service, seniority or professional qualifications
• other payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date

Whether bonuses are included in normal holiday pay depends on the nature of the bonus.

Workers with regular hours and fixed pay must receive the same holiday pay as the pay they would receive if they were at work and working. For example, workers typically on a fixed monthly salary, if they take a week’s holiday, they will receive the same pay at the end of the month as they normally receive.

For leave years beginning on or after 1 April 2024, part-year and irregular hours workers are legally entitled up to a maximum amount of 5.6 weeks of paid statutory holiday entitlement per year, calculated according to actual hours worked using the 12.07% accrual method. If their employer chooses to use rolled-up holiday pay, then the entire amount of their leave for irregular hours and part-year workers will be paid at the ‘normal’ rate of pay.

The rolled-up holiday pay method is set out below. Employers may choose not to use rolled-up holiday pay, in which case they can use the existing 52-week reference period method to look back at a worker’s previous 52 paid weeks to calculate what that worker should be paid for a week’s leave. Both methods are set out in more detail in the sections below. Workers who are irregular hours or part-year workers will have all of their statutory holiday entitlement paid at a rate based on their total pay, whether it is calculated as rolled-up holiday pay or by reference to the previous 52 weeks.

6.2 Rolled-up holiday pay

Rolled-up holiday pay allows employers to include an additional amount with every payslip to cover a worker’s holiday pay, as opposed to paying holiday pay when a worker takes annual leave.

The regulations allow employers to use rolled-up holiday pay as an additional method for calculating holiday pay for irregular hour and part-year workers only, for leave years beginning on or after 1 April 2024.

The calculation of holiday pay by employers is 12.07% of a worker’s total pay as 12.07% is the proportion of statutory annual leave in relation to the working weeks of each year, for example, 5.6 weeks of statutory annual leave divided by 46.4 working weeks of the year.

Employers using rolled-up holiday pay should calculate it based on a worker’s total pay in a pay period. A pay period is the frequency at which workers get paid, that is weekly, fortnightly, monthly, and the like.  

If employers intend to start using rolled-up holiday pay, they should check their workers’ contract in case this amounts to a variation of contract. Employers should tell their workers if they intend to start using rolled-up holiday pay and for this payment to be clearly marked as a separate item on each payslip. The holiday pay should be paid at the same time as the worker is paid for the work done in each pay period. Employers of agency workers must include this information in the agency worker’s Key Information Document.

The holiday pay should be paid at the same time as the worker is paid for the work done in each pay period. Rolled-up holiday pay is to be paid in addition to the worker’s normal salary, which should be at National Minimum Wage or above. If annual leave is carried over where a worker is paid using rolled-up holiday pay, the leave will already have been paid at the time the work was done.

Employers that do not want to use rolled-up holiday pay for irregular hour and part-year workers can continue to use the existing 52-week reference period to calculate holiday pay for irregular hour workers if they choose to do so as set out in section 6.3 below.

If a worker who receives rolled-up holiday pay goes off sick or takes maternity / family-related leave during a pay period, their rolled-up holiday pay would be calculated according to average amount of the worker’s total earnings in each pay period during the 52-week relevant period.

Tables 6 and 7 below set out how to calculate how much rolled up holiday pay a worker could receive under different scenarios.  

Example: holiday entitlement when paid weekly

Hana works irregular hours and is paid weekly. Her hourly rate is £10.42 per hour for all shifts. In the week 1 October to 7 October, Hana worked 35 hours.

To work out how much rolled-up holiday pay Hana is entitled to, you will need to calculate 12.07% of Hana’s total pay in this pay period.

Table 6: rolled-up holiday pay calculation when a worker’s basic pay is their normal pay

Step	Method	Calculation
1	Multiply the hours worked by the hourly rate to find the worker’s total pay in this pay period (1 October to 7 October)	35 x £10.42 per hour = £364.70
2	Divide the answer to Step 1 by 100, rounding to the nearest pence	£364.70 ÷ 100 = £3.65
3	Multiply the answer to Step 2 by 12.07	£3.65 x 12.07 = £44.0555
4	Round the answer to Step 3 up or down to the nearest pence	£44.0555 becomes £44.06

Answer: Hana is entitled to receive £44.06 rolled-up holiday pay in her payslip for the period 1 October to 7 October.

Example: holiday entitlement when paid fortnightly

Mark works irregular hours and is paid fortnightly. His hourly rate is £11 per hour (normal hourly rate) for shifts 7am to 11:59pm and £12 per hour (enhanced hourly rate) for shifts midnight to 6:59am. In the fortnight 1 August to 14 August, Mark worked 40 hours. He worked 20 hours at normal rate (£11 per hour) and 20 hours at an enhanced rate (£12 per hour).

To work out how much rolled-up holiday pay Mark is entitled to, you will need to calculate 12.07% of Mark’s total pay in this pay period.

Table 7: rolled-up holiday pay calculation when a worker’s shifts are at a premium rate

Step	Method	Calculation
1	Multiply the hours worked by the relevant hourly rate	20 hours (normal rate) x £11 per hour = £220 20 hours (enhanced rate) x £12 per hour = £240
2	Add the answers from Step 1 together to find the worker’s total pay in this pay period (1 August to 14 August)	£220 + £240 = £460
3	Divide the answer from Step 2 by 100, rounding to the nearest pence	£460 ÷ 100 = £4.60
4	Multiply the answer to Step 3 by 12.07	£4.60 x 12.07 = £55.522
5	Round the answer to Step 4 up or down to the nearest pence	£55.522 becomes £55.52

Answer: Mark is entitled to receive £55.52 rolled-up holiday pay in his payslip for the period 1 August to 14 August.

As Table 7 shows, the calculation for rolled-up holiday pay applies to a worker’s total pay in a pay period, regardless of differing hourly rates of pay.

6.3 A 52-week reference period to calculate holiday pay

Where a worker has irregular hours or works part of the year, employers can calculate their holiday pay using an average from the last 52 weeks in which they have worked and have earned pay.

If a worker has not been in employment for long enough to build up 52 weeks’ worth of pay data, their employer should use however many complete weeks of data they have. For example, if a worker has been with their employer for 26 complete weeks, that is what the employer should use.

If a worker takes leave before they have been in their job a complete week, then the employer has no data to use for the reference period. In this case the reference period is not used. Instead, the employer should pay the worker an amount which fairly represents their pay for the length of time the worker is on leave.

In working out what is fair, the employer should take into account:

• the worker’s pay for the job
• the pay already received by the worker (if any)
• what other workers doing a comparable role for the employer (or for other employers) are paid

How far back employers should look

To prevent employers having to look back more than 2 years to reach 52 weeks’ of pay data, there is a cap on how far back employers should look.

Any weeks that are before the 104 complete weeks prior to the first day of the worker’s holiday are not included. In this case the reference period is shortened to however many weeks are available in this 104-week period.

Employers should still only count back as far as is needed to achieve 52-weeks’ worth of pay data if this is less than 104 weeks.

Where a worker has been employed by their employer for less than 52 weeks, the reference period is shortened to the number of weeks of their employment.

The reference period must only include weeks for which the worker was actually paid. It must not include weeks where they were not paid as they did not work. Where this gives less than 52 weeks to take into account (that is, where the worker has many weeks without any remuneration), the reference period is shortened to that lower number of weeks.

If a worker started work 30 weeks ago, employers should use pay data from as many of those weeks that the worker was paid to calculate the worker’s holiday pay and provide a fair rate of pay.

If an employer has counted back over 104 weeks and has only found 40 weeks of pay data for a worker, then the employer should use these 40 weeks of pay data.

If a worker has taken a period of leave within the 52-week reference period, then any weeks on which no pay was due should not be included when calculating pay (in contrast to the calculation of holiday accrued). Any weeks with time off sick or on maternity/ family-related leave are also excluded from the reference period. Instead, additional earlier paid weeks should be included to achieve the 52-week total.

The definition of a ‘week’ for the purpose of the holiday pay reference period

The relevant definitions within the Employment Rights Act 1996 are:

• a week starts on a Sunday and ends on a Saturday;
• the holiday pay reference period should start from the last complete working week that was worked ending on or before the first day of leave, starting on a Sunday and ending on a Saturday.

Under the Employment Rights Act 1996, the holiday pay reference period starts from the last whole week ending on or before the first day of the period of leave. This will typically be a week from Sunday to Saturday, but it could end on another day of the week if a worker is paid on a weekly basis.

There is an exception for workers whose pay is calculated weekly by a week ending on a day other than Saturday. In these cases, a week is treated as ending with that other day. For example, if a worker’s pay is calculated by a week ending with a Wednesday, then the employer should treat a week as starting on a Thursday and finishing on a Wednesday.

Table 8: 52-week reference period holiday pay calculation examples

Worker	Current holiday pay calculation
Joe has been working for his employer for over a year with variable pay.	Joe’s holiday pay is averaged from his pay over the past 52 weeks.
Rachel started with a new employer 20 weeks ago and is on variable pay.	As Rachel’s employer does not have 52 weeks’ worth of data to use, they use what data is available. As such, Rachel’s holiday pay is averaged from her pay over the past 20 weeks.
Ben works irregularly for his employer and over the past 104 weeks has received pay in 45 of them.	As Ben only has 45 applicable weeks in the last 104, Ben’s employer calculates his holiday pay using an average from his pay over the 45 weeks in which he earned pay.
Amy works irregularly for her employer and in the past 104 weeks she has received pay in 75 of them.	As Amy has at least 52 applicable weeks in the last 104, her holiday pay is averaged from her pay in the most recent 52 complete weeks worked.
Carys works part-year and over the past 52 weeks she has worked for 25 of them.	As Carys only has 25 applicable weeks, her employer calculates her holiday pay using an average from her pay of the 25 weeks in which she earned pay.

6.4 Calculating holiday pay for irregular hours workers and part-year workers using a 52-week reference period

If the reference period method of calculating holiday pay is used, the holiday pay irregular hour workers and part-year workers receive will be their average pay over the previous 52 weeks. This involves taking the last whole week, ending on a Saturday, as the most recent week. (If the worker is paid weekly on a day other than a Saturday, this would not apply).

The reference period must not include weeks where the worker received no pay or weeks when a worker was for any amount of time on sick leave or statutory leave, such as maternity leave.

This may mean that the actual reference period takes into account pay data from further back than 52 weeks from the date of their leave. However, it should go back no more than 104 weeks. If this gives fewer than 52 weeks to take into account, then the reference period is shortened to that lower number of weeks.

The following example uses a worker’s gross pay data to set out how to calculate paid and non-paid weeks.

Table 9: illustration of paid and non-paid weeks, for the 52-week reference period method for holiday pay

Week	Gross pay per week	Paid / unpaid week
1	£300	Paid
2-5	£350	Paid
6	£0	Unpaid
7	£10	Paid
8-22	£100	Paid
23-25	£0	Unpaid
25-40	£400	Paid
41-45	£200	Paid
46-48	£0	Unpaid
49-54	£180	Paid
55-59	£150	Paid

An employer should discount weeks 6, 23 to 25 and 46 to 48 in Table 9, which is 7 weeks, as there was no pay in these weeks, reflecting that the worker performed no work. As 7 weeks have to be discounted, the employer must go back a further 7 weeks to take the total to 52 weeks of pay data when calculating holiday pay for this period. These extra weeks are weeks 53 to 59 in Table 9.

The total pay over the 52 weeks is calculated by summing the pay for each week. The calculation is:

(1 × £300) + (4 × £350) + (1 × £10) + (15 × £100) + (15 × £400) + (5 × £200) + (6 × £180) + (5 × £150) = £12,040.

This is then divided by the 52 weeks-worth of data used to calculate the average:

£12,040 ÷ 52 = £231.54.

A week’s holiday taken in the week following would therefore be paid at a rate of £231.54 (which is the average weekly pay from the pay data in Table 9).

6.5 Payment in lieu

If an irregular hour worker or part-year worker does not take their accrued holiday entitlement by the time they leave employment, they should be paid for this untaken holiday (known as ‘payment in lieu’).

This should be calculated by working out the individual’s remaining holiday entitlement and then working out their holiday pay for this period. Employers should remember to deduct any holiday taken from the total holiday entitlement to correctly calculate the remaining holiday the worker is entitled to.

A worker is employed for 2 weeks. They start to accrue holiday entitlement from Day 1 but take no holiday leave during the 2-week period.

At the end of their contract (termination of employment) they should be paid in lieu for all holiday accrued during this 2-week period.

Holiday pay for the leave accrued should then be calculated using an average of the 2 weeks in which they were paid.

7. Additional resources

Workers should not suffer detriment for querying whether they are receiving the correct holiday entitlement and pay.

If workers feel that they are being denied their statutory holiday entitlement or holiday pay or any other employment rights, they may wish to speak to the Advisory, Conciliation and Arbitration Service (Acas).

Acas provide free and impartial advice to employers and workers on employment matters. You can read their guidance on holiday entitlement and pay for more information.

Contact information for Acas is below:

Acas helpline
Telephone: 0300 123 11 00
Textphone: 18001 0300 123 1100
Monday to Friday, 8am to 6pm

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