Holiday entitlement and holiday pay: the employer's guide

The entitlement

Every worker is entitled to 5.6 weeks' paid holiday a year: four weeks under regulation 13 (from European law) and 1.6 weeks under regulation 13A (the UK addition, roughly the bank holidays). For a five-day week that is 28 days, and 28 days is the statutory cap however many days a week the person works. The employer may include bank holidays within the 5.6 weeks or give them on top; the contract says which. There is no statutory right to a day off on a bank holiday.

Part-time workers on fixed days get 5.6 times their working week: four days a week is 22.4 days, three is 16.8, usually rounded up. Days, not hours, is fine where the days are equal length; where they are not, calculate in hours.

Irregular hours and part-year workers (from April 2024)

For leave years starting on or after 1 April 2024, workers whose paid hours are wholly or mostly variable in each pay period (irregular hours workers) and workers who are not required to work for at least a week in the year and are not paid for that week (part-year workers, including term-time staff) accrue holiday differently: at 12.07% of the hours worked in each pay period, calculated in hours, capped at 5.6 weeks.

For these workers employers may pay rolled-up holiday pay: an uplift of 12.07% on every payslip, shown separately, instead of paying when leave is taken. The worker still has the right to take the time off (unpaid, because the pay has already been rolled up). Rolled-up pay is not permitted for regular-hours workers. Work-Lynx's holiday calculator does the 12.07% accrual by pay period.

What a week's holiday pay is

Holiday pay is a week's normal remuneration. For the four weeks under regulation 13, that means, in the words of the 2024 regulations: payments intrinsically linked to the performance of the tasks the worker is contractually obliged to do (including commission); payments for professional or personal status (length of service, qualifications); and overtime payments that have been regularly paid in the 52 weeks before the calculation date. Basic pay only, for someone who does regular paid overtime, is an underpayment.

For workers without normal working hours, or with pay that varies, a week's pay is the average over the previous 52 weeks in which pay was received, skipping weeks with no pay and going back up to 104 weeks to find 52. The 1.6 weeks under regulation 13A may be paid at basic contractual pay if the contract says so; many employers pay all 5.6 weeks the same way for simplicity.

Carry-over

The four regulation 13 weeks must be taken in the leave year, except where the worker could not take them because of sickness (carry-over of up to 18 months), family leave (carry-over of the untaken balance), or because the employer did not give them a reasonable opportunity to take leave, did not encourage them to, or did not tell them that untaken leave would be lost. The 1.6 weeks can be carried over by agreement in the contract. Pay in lieu of untaken statutory holiday is not allowed during employment; only on termination.

Notice: taking, refusing, requiring

Unless the contract says otherwise: a worker gives notice of at least twice the length of the leave they want; the employer can refuse by counter-notice given at least as long before as the leave would have lasted; and the employer can require leave to be taken (a shutdown) with notice of at least twice the length of the leave. Your policy can set different rules, and most do (a booking form, a first-come-first-served cap per team, blackout weeks); publish it and apply it evenly.

Leavers

On termination, accrued untaken statutory holiday is paid, whatever the reason for leaving, at the rate above. If the worker has taken more than they had accrued, you can deduct the excess only if the contract (or a written agreement made before the deduction) allows it. The calculation runs from the start of the leave year to the termination date: 5.6 weeks times the fraction of the year served, less days taken. For irregular hours workers it is the 12.07% accrual to the leaving date, less leave taken.

Common underpayments

These are the claims that reach tribunals, and they reach back two years as a series of deductions:

• Paying basic rate to someone who regularly works paid overtime.
• Calculating an irregular worker's holiday pay on a 12-week average (the reference period has been 52 weeks since April 2020).
• Treating holiday as accruing only after probation or after a qualifying period. It accrues from day one.
• Not counting bank holidays that fall on a part-timer's non-working day towards their entitlement, so full-timers get more than 5.6 weeks pro rata.
• Zero-hours staff never told they have holiday, and never paid it.

The admin this guide describes, done for you

Work-Lynx holds the records, calculates the entitlements, drafts the letters and reminds you of the dates: 49 UK policies, GPS clock-in, rotas, leave, timesheets, payslips and Employ AI for the questions in between. £2.50 a month plus £1 per employee, 14 days free, no card.