Holiday rights and pay

In the UK, all employees and nearly all workers, including full-time, part-time, and zero-hours contract workers, are legally entitled to paid annual holiday, or  ‘statutory annual leave’. The total days of leave you’re eligible for depend mainly on your work schedule, what category of worker you are, and any additional agreements that you may reach with your employer.

This guide outlines what holiday pay different kinds of worker are entitled to and how your entitlement and pay are calculated.  It takes account of reforms to holiday pay for part-year and irregular hours workers that came into force in early 2024.

 

When do you start accumulating holiday pay?

From the day you start your job, you begin accruing holiday time. This includes during probationary periods, sick leave, and various parental leaves like maternity, paternity, adoption, or shared parental leave.

Some contracts may offer more than the statutory holiday entitlement, often referred to as ‘enhanced’ or ‘contractual’ holiday entitlement.

Full time workers’ holiday entitlement

If you’re a full-time worker, you’re legally guaranteed 5.6 weeks of paid holiday each year. This may include bank holidays, depending on your contract.

For full-time employees working five days a week, this equates to 28 days of holiday annually. However, the maximum statutory paid holiday is capped at 28 days, regardless of whether or not you work more than five days a week.

Holidays for part-time and casual workers

Part-time workers also receive 5.6 weeks of paid holiday on a ‘pro-rata’ basis, ensuring they’re not treated less favourably than full-time employees.

For example, a part-time worker on a three-day week schedule is entitled to 16.8 days of holiday annually. If full-time employees receive more than the legal minimum holiday, part-time employees must receive an equivalent proportion.

Those with irregular work patterns but ongoing contracts, such as shift workers, term-time workers, and zero-hours contract employees, must also receive a minimum of 5.6 weeks’ paid holiday. This entitlement isn’t affected by the actual number of weeks worked in a year, as the contract covers the whole year.

Employees with contracts lasting less than a year, or ending part-way through the year, receive a prorated amount of holiday based on the duration of their contract, not on the weeks worked. For instance, a zero-hours worker on a six-month contract is entitled to 2.8 weeks of holiday.

Holiday entitlement during parental leave

During various types of parental leave, such as maternity, paternity, adoption, shared parental leave, ordinary parental leave, and parental bereavement leave, employees continue to accrue holiday entitlement. See section 3.3. of the government’s guide to the reforms ‘Holiday pay and Entitlement Reforms from 1st January 2024’

Before and during parental leave, it’s advisable to discuss with your employer the accrual of paid holiday, its usage, carryover policies, and any contractual holiday entitlements that may allow for payment in lieu of unused days.

Self-employed workers and paid holidays

Self-employed individuals typically don’t receive paid holiday, though this can vary depending on the nature of their contracts and employment status.

 

Calculating your holiday pay

Calculating holiday pay manually can be quite complicated, but the main goal is to ensure that you receive equivalent pay during holidays as you do during regular work periods, regardless of your work patterns.

When holiday entitlement includes fractions of days, employers must not round down these part days but aren’t required to round them up either, although they can if they wish. Arrangements for utilising these part days should be discussed and agreed with your employer.

Holiday pay for employees with fixed working hours

If you have fixed working hours, whether part-time or full-time, holiday pay is calculated based on your regular pay rate. For instance, if you work 37 hours a week for £500, your holiday pay for a week should also be £500.

Holiday pay for workers with irregular hours

If you don’t have fixed hours, holiday pay is calculated based on your average pay from the previous 52 weeks. If there were weeks with no pay, substitute these with weeks where you received normal pay. In situations where pay was minimal, like statutory sick pay, replace these with a typical pay week. You can count back up to 104 weeks if necessary to get an accurate calculation.

In your first year of employment, if you haven’t worked for 52 weeks, your employer should calculate your average pay based on the number of weeks you have worked.

If you’re taking holiday before accruing enough entitlement in your first year, your employer should determine a fair pay rate considering factors like your job’s pay rate, any pay you’ve already received, and the holiday pay rates of others in similar roles.

Holiday pay calculations include payments like commission

By law, holiday pay must include commission, payments related to professional or personal status, and other regular payments like overtime, if these were frequently paid over the past year. These additional payments should be included in at least four weeks of your holiday pay. While some employers may include these in the full statutory annual leave of 5.6 weeks, they are not required to do so.

Rolled-up holiday pay

If you work full time, your employer must pay your holiday pay when you take your holiday. ‘Rolled-up’ holiday pay, where holiday pay is spread over the year by adding an amount to your hourly rate with every payslip, is not permitted for full time workers.

However, recent reforms to the law on holiday pay (January 2024), allows employers to use rolled-up holiday pay as an additional method for calculating holiday pay – but for irregular hour and part-year workers only, and only for leave years beginning on or after 1 April 2024.

Help with calculating your holiday pay

You can use the government’s holiday pay calculator on the gov.uk website to calculate your holiday pay entitlement.  However, if you’re not sure exactly what holiday you are entitled to, also check it out with your manager or HR representative and also refer to  your employment contract.

 

 

What next?

If you’re not happy about the duration or calculation of your holiday pay, discuss it informally with your employer in the first instance.

If you can’t resolve the problem, you could consider making a claim to an employment tribunal, although in cases such as holiday pay, Monaco Solicitors would nearly always recommend out of court settlement as your first goal.

We are an established employment law firm and all of our work is about helping employees like you (not employers).  Our specialist employment law solicitors are experts in their field and have helped hundreds of people win their cases when they are being treated unfairly at work. If you’d like legal help with your particular case:

• Get in touch on line
• phone 020 7717 5259
• email communications@monacosolicitors.co.uk