Calculating holiday pay - Holiday entitlement

Calculating holiday pay

When an employee takes holiday, they should get the same pay when they're on holiday as when they're at work.

Some employers might offer better holiday pay schemes. Employees should check their contract.

Holiday pay calculations can be based on:

  • days or hours worked per week
  • casual or irregular hours
  • shifts

Holiday pay is based on weekly pay, so it's helpful to work this out first.

How to calculate a week's pay

For calculating holiday pay, a week usually starts on a Sunday and ends on a Saturday.

An employee's holiday pay should be calculated from the last full week that they worked. This can end on or before the first day of the employee's holiday.

Another 7-day period should only be used if that's how the employee's pay is calculated.

For example, an employee's pay is calculated by a week ending on a Wednesday. They should treat a week as starting on a Thursday and ending on a Wednesday.

Calculating holiday pay for different working patterns

How to calculate someone's holiday pay depends on their working pattern.

Fixed hours

If an employee's working hours do not vary, their holiday pay will be calculated using their usual pay rate. This is the case whether they work full time or part time.

For example, an employee works 37 hours every week and gets paid £400 a week. When they take a week's holiday, they must get paid £400.

Irregular hours workers and part-year workers

There are specific rules for working out holiday pay for irregular hours workers and part-year workers.

Find out more about holiday pay for irregular hours workers and part-year workers

In the first year of a job

In the first year of their job, an employee might be able to take paid holiday before they've 'accrued' it (built it up). They must agree this with their employer. For example, an employer might agree to an employee taking holiday soon after they start their job.

What holiday pay must include

By law, holiday pay must include:

  • payments linked to doing tasks required in the contract, for example commission
  • payments related to professional or personal status, for example for length of service, seniority or professional qualifications
  • other payments, for example overtime payments, if an employee has regularly been paid these during the last year

Employers must include any relevant payments in at least 4 weeks of holiday pay.

Some employers might include these payments in the full 5.6 weeks' paid holiday (statutory annual leave), but they do not have to.

Rolled-up holiday pay

Employees must get paid for their holiday when they take it. If an employer spreads holiday pay over the year by adding an amount on top of their employees' hourly rate, this is known as 'rolled-up' holiday pay.

Employers must not do this unless a worker is covered under the new rules for irregular hours workers and part-year workers.

Leave years starting on or after 1 April 2024

For leave years starting on or after 1 April 2024, employers can choose to use rolled-up holiday pay. This applies to irregular hours workers and part-year workers only.

Find out more about rolled-up holiday pay for irregular hours workers and part-year workers

If someone thinks their holiday pay should be different

If an employee thinks their holiday pay should be different, they should check their contract. It might make clear:

  • how their pay is calculated
  • whether the employer offers more than the legal minimum paid holiday

Employees should talk with their employer if:

  • they think they're not getting as much paid holiday as they're entitled to
  • they're not sure how their holiday pay is being calculated

Find out about how to raise a problem at work

Making a legal claim

If an employer does not correct a problem with holiday pay, an employee could make a claim to an employment tribunal.

There are strict time limits for making a claim to an employment tribunal.

In most cases, an employees has 3 months minus 1 day from the date of the most recent wrong holiday payment.

Find out more about:

Contact the Acas helpline

If you have any questions about calculating holiday pay, you can contact the Acas helpline.

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