Quick answer: For workers with irregular hours or variable pay, holiday pay is their average weekly pay over the last 52 weeks in which they were paid. Skip any week with no pay, or only Statutory Sick Pay (SSP) or statutory leave pay, and count back no further than 104 weeks. Regular overtime, commission, and status-linked payments must be included. Irregular-hours and part-year workers build up holiday at 12.07% of the hours they work.
Checked October 2026.
Holiday entitlement is a vital right to rest, granted to employees and backed by UK law. In the UK, employers must follow the Working Time Regulations on paid annual leave. But it’s more than that. As an HR or payroll leader, you want to get it right so you’re doing right by your people.
To make things easier for you, this guide covers how to calculate holiday pay correctly in 2026, followed by everything you need to know about holiday entitlement.
What is holiday entitlement?
The UK statutory leave entitlement means that each employee has a legal right to take 28 days of paid annual leave each year (that’s based on an employee who works 5 days a week). This is also known as statutory annual leave.
The Working Time Regulations, set out in 1998, states that employees should get a minimum of 5.6 weeks of annual leave from work each year, to protect the health and safety of anyone classed as a worker. Those five-point-six weeks of annual leave works out to be 28 days if your employee works a 5-day week (which is considered “full-time” employment). For part-time workers, this is calculated on a pro-rata basis. The total number of days in the 28 days may include bank holidays.
In the UK we have between 8 – 10 days of bank holidays, depending on the country. England and Wales usually have 8, whilst Scotland and Northern Ireland have 10 hank holidays per year. All employees in the UK are entitled to a day off, or a day of annual leave in lieu of the day off.
Check out: All UK bank holidays 2025.
Employers can offer their employees more than the minimum annual leave. With extra holiday entitlement, you get to have the final say on the rules. You can offer your employees any number of holidays you like, and can implement systems where they accrue with length of service. By way of example, Terry in accounting has to have worked for his organisation for a minimum of 6 months before he’s entitled to get the extra 7 days leave that they grant to all their employees. Or perhaps he gains 1 extra day per year for each year of service, up to a certain number.
How is holiday pay calculated in 2026?
Workers are entitled to a week’s pay for every week of statutory leave they take. For people on fixed hours and fixed pay, that’s simple: a week’s holiday is paid at a normal week’s pay.
It gets trickier when hours or pay vary. That’s where the 52-week reference period comes in. Since 6 April 2020, employers have had to look back over the worker’s last 52 paid weeks to work out an average week’s pay.
What counts as “pay” matters too. Since 1 January 2024, the law has defined normal pay as including regular overtime, commission, and payments linked to seniority or professional status. Here’s how that plays out for different workers:
| Worker type | How holiday builds up | How holiday is paid |
|---|---|---|
| Fixed hours, fixed pay | 5.6 weeks a year (28 days for a five-day week) | A normal week's pay |
| Regular hours, variable pay (for example, regular overtime or commission) | 5.6 weeks a year | 4 weeks at normal pay (52-week average), 1.6 weeks at basic pay |
| Irregular-hours and part-year workers | 12.07% of hours worked each pay period | 52-week average at normal pay, or rolled-up holiday pay |
A lot of organisations still pay holiday at basic rate for everyone. That’s been out of step with the law for some time, and it’s one of the most common holiday pay errors we see.
The 52-week reference period, step by step
To make things easier for you, here’s the calculation in order:
- Find your starting point: count back from the last complete week (Sunday to Saturday) that ends on or before the first day of leave.
- Take the last 52 paid weeks: go back week by week, collecting 52 weeks in which the worker was paid.
- Skip the weeks that don’t count: leave out any week where the worker got no pay, only SSP, or reduced statutory leave pay (like Statutory Maternity Pay), and bring in an earlier week instead.
- Stop at 104 weeks: don’t count back further than 104 weeks. If that gives you fewer than 52 paid weeks, use however many you have.
- Add up the pay: include regular overtime, commission, and status-linked payments, not just basic pay.
- Divide by the number of weeks: that’s the average week’s pay.
- Multiply by the weeks of holiday taken: that’s the holiday pay due.
If the worker has been with you for less than 52 weeks, use the full weeks they’ve worked.
Don’t use 12 months of payroll data as a shortcut: twelve calendar months don’t line up exactly with 52 weeks, so the average can come out wrong.
Worked example: irregular hours and overtime
Illustrative figures, not a real customer case.
Sam works variable shifts. Over the last 52 paid weeks, Sam earned £15,600, including £1,100 of regular overtime.
- Average weekly pay: £15,600 ÷ 52 = £300
- Sam takes two weeks off, so holiday pay is £300 × 2 = £600
Now say Priya, a colleague, was off sick for two weeks during the year and received only SSP. Those two weeks don’t count. Her employer skips them and brings in two earlier paid weeks instead.
- Pay from her 50 normal weeks: £14,500
- Pay from the two earlier replacement weeks: £580
- Total: £15,080 ÷ 52 = £290 a week
- Priya takes one week off, so holiday pay is £290
Had her employer left the SSP weeks in, her average would have been lower, and she’d have been underpaid.
Get the latest insights and best practice guides, direct to your inbox.
Weeks that don’t count, and the 104-week limit
This is the step that trips up a lot of payroll teams. A week drops out of the reference period if the worker:
- received no pay at all
- was off sick and received only SSP
- was on statutory leave (maternity, paternity, adoption, shared parental, or parental bereavement leave) and received less than their normal pay
Each of those weeks is replaced with an earlier paid week, going back no further than 104 weeks. For workers with long gaps (seasonal staff, for example), you may end up with fewer than 52 weeks of data, and that’s fine. You just use what’s there.
Good news, but also stay vigilant: workers keep building up holiday while they’re on sick or statutory leave, even though those weeks don’t count towards the pay average.
What must holiday pay include?
Since 1 January 2024, the law has set out what “normal pay” means for holiday purposes. It must include:
- Regular overtime: overtime that’s been paid regularly in the 52 weeks before the calculation.
- Commission: payments linked to the work the worker does, such as sales commission.
- Status-linked payments: for example, payments for length of service, seniority, or professional qualifications.
- Payments intrinsically linked to the work: such as allowances that are part of the job.
For regular-hours workers, these elements must be included in at least four of the 5.6 weeks of statutory leave. Employers can choose to include them across the full 5.6 weeks, but they don’t have to. For irregular-hours and part-year workers, normal pay applies to all of their statutory leave.
Contractual leave above the statutory minimum is a different matter. It’s paid according to the contract, so check what yours says.
Irregular-hours accrual at 12.07% and rolled-up holiday pay
For leave years starting on or after 1 April 2024, irregular-hours and part-year workers build up holiday as they work, rather than getting a full year’s entitlement up front.
How the 12.07% works
At the end of each pay period, the worker accrues holiday equal to 12.07% of the hours they worked in it. (For those not in the know, the figure comes from 5.6 weeks of holiday divided by the 46.4 weeks a year that people typically work.)
For example, a worker who does 68 hours in June accrues 68 × 12.07% = 8.21 hours of holiday.
Rolled-up holiday pay
As an alternative, you can pay irregular-hours and part-year workers an extra 12.07% on top of their pay each period, instead of paying them when they take leave. A worker who earns £1,000 in a month would get £120.70 in rolled-up holiday pay.
This works well when hours are highly unpredictable, but be aware of the rules:
- It’s only allowed for irregular-hours and part-year workers, never for regular-hours staff.
- It must be shown as a separate line on the payslip.
- The worker must still take their leave. Rolled-up pay isn’t a replacement for time off.
Holiday entitlement basics
How much holiday am I entitled to?
In the UK, full-time employees are entitled to a minimum of 28 days (5.6 weeks) of paid holiday a year, and employers can choose to include bank holidays within it. Part-time workers get a pro-rata amount. Your actual entitlement can also depend on your contract, your employment type, and what your organisation offers on top. It’s always best to speak to your HR team, or check your contract.
How do you work out holiday entitlement?
As an HR or payroll professional, you need to make sure you’re working out employees’ annual leave correctly. Annual leave in the UK builds up based on how much an employee works, so it’s worth checking how you’re calculating it. Try our annual leave calculator below.
Annual leave calculator
Looking to work out your employee’s holiday entitlement? Check out our annual leave calculator.
How do I request holiday?
To make annual leave a reality, employees have to give their employer written notice to request the leave. The general rule is this: the period of notice required must be twice the length of the leave requested. So, for 14 days leave, they’ll writing to ask for leave 28 days before.
Employers do have the right to refuse leave, or even cancel it. Usually, they have to have a valid reason, such as peak periods in the business. When doing so, they must provide notice equal to the number of holidays requested.
Employees should always see what their contract says when it comes to notice terms. Generally, what’s in the contract is the final word.
Holiday Pay for casual workers
Casual workers in the UK are entitled to holiday pay, however, the calculations can differ based on employees hours, their contract length, and even how they’re employed your organisation. You also have options on how you offer annual leave payments to casual workers. Check out: Holiday Pay for Casual Workers.
The accrual system
Accrual year vs leave year
The right to annual leave begins from a worker’s first day and builds up (or accrues) over time.
For UK holiday entitlement, as an employer, you can use an “accrual” system or a “leave year” to work out how much leave your staff should get.
A leave year is the period – set out in your contract with the employee – during which employees can take holiday. An example? Some run from 1st January to 31st December, others might follow the tax year. It’s up to the employee to take their annual leave within this period. The leave year is unaffected by other leave, such as maternity or paternity but they’ll still accrue leave over such periods.
Starting part-way into leave year
If someone starts their job and time has already elapsed
into the leave year, they’ll only get a fraction of holiday for the year. Of course, it depends on how much of the
leave year is remaining.
Carrying over leave into the next year
The short answer: it depends. It’s worth employees checking their employee handbook to see where they stand. Usually, a maximum of 8 days can be carried over to the next year (based on a worker having 28 days’ leave).
Where employees get more than 28 days, they might be allowed to carry any unused holiday entitlement over. This needs to be clear to your people – they should be able to either check their contract, your intranet or ask the boss!
Holiday and sick or family leave
Employees on sick leave, maternity leave, or paternity leave keep building up holiday, however long they’re off. Holiday they can’t take because of illness can be carried over to the next leave year.
Employees can also ask to use their holiday while they’re off sick, for example if they don’t qualify for sick pay. But employers can’t make people take annual leave when they’re eligible for sick leave.
Holiday pay for casual workers
Casual workers in the UK are entitled to holiday pay, and the 12.07% and rolled-up rules often apply to them. The calculation can depend on their hours, their contract, and how they’re engaged by your organisation. Find out more in our guide to holiday pay for casual workers. For bank holiday dates, see UK bank holidays on GOV.UK.
How Cintra People handles holiday pay
Keeping track of holiday entitlement and getting the 52-week average right by hand means pulling together a year or more of pay history, skipping the right weeks, and including the right pay elements, for every worker who takes leave. That’s a lot of room for error.
Cintra People holds approved leave and pay history in the same record, so holiday requests flow straight through to payroll without rekeying. Cintra works with both in-house and outsourced payroll customers, and features include:
- Self-service holiday requests that sync through to payroll.
- Absence management with customisable leave entitlements, for all those different contracts and working patterns.
- Team calendars so everyone knows who’s off and when, which is especially handy for hybrid and remote teams.
If you’d like to see how it works for your organisation, we’re happy to walk you through it.
HR & Employment Law Guide
Grab your accessible summary of guidance and insights about where HR practices meet employment law.
Frequently asked questions
A. It’s the period used to work out an average week’s pay for workers whose hours or pay vary. You look back over the last 52 weeks in which the worker was paid, skipping weeks with no pay, only SSP, or reduced statutory leave pay, and going back no further than 104 weeks.
A. Yes, if it’s paid regularly. Regular overtime, commission, and status-linked payments must be included in at least four weeks of statutory holiday pay. For irregular-hours and part-year workers, they’re included in all of their statutory leave.
A. It’s the rate at which irregular-hours and part-year workers build up holiday, for leave years starting on or after 1 April 2024. At the end of each pay period, they accrue 12.07% of the hours they worked.
A. Only for irregular-hours and part-year workers, and only for leave years starting on or after 1 April 2024. You pay an extra 12.07% each pay period, show it as a separate line on the payslip, and the worker still takes their leave.
A. An employer can refuse a holiday request for a particular period, but can’t stop workers taking their statutory holiday entitlement altogether. If they refuse leave, they must give notice equal to the time off requested.
A. It comes down to communication. If an employee falls ill on holiday, they can usually take the time as sick leave instead and keep those holiday days for later. They’ll need to follow your usual sickness reporting rules, and you’ll agree together whether they get sick pay or holiday pay for that time.
A. When an employee leaves, they must be paid for any statutory holiday they’ve built up but not taken. If they’ve taken more than they’ve accrued, you can only recover it if their contract allows.
A. Employers must always meet the statutory minimum of 5.6 weeks (28 days for a five-day week). They can offer extra leave on top, and that extra leave follows the contract rather than the regulations. Changing contractual terms usually needs the employee’s agreement.
A. Yes, for example over Christmas or bank holidays, as long as they give notice of at least twice the length of the leave.
