With the new changes to the Working Time Regulations (introduced on 1 January 2024), we thought now would be a good time to recap on the basics of calculating holiday entitlement and pay. The changes are supposed to have made details of holiday entitlement easier to understand, but they do remain complicated. If you have any questions, or for specific scenarios relating to holiday pay, please contact the employment team and we will be happy to help.
Holiday entitlement
Type of worker | Statutory holiday entitlement |
Full time | 5.6 weeks’ paid holiday or 28 days. |
Part time | 5.6 weeks’ pro-rated. E.g. someone working 4 days a week would be entitled to 22.4 days’ leave per year (4 x 5.6).
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Irregular hours (up to 31 March 2024) | 5.6 weeks’ holiday |
Irregular hours (for leave years starting on or after 1 April 2024) | 12.07 % of hours worked during a pay period, rounded up or down to the nearest hour. A pay period refers to how often they are paid e.g. weekly, monthly etc. E.g. if they work 30 hours in a week and are paid weekly, the calculation would be 30 x 12.07 ÷ 100 = 3.621 so the entitlement would be 4 hours’ paid leave for that week’s work |
Holiday in addition to the above statutory entitlement is known as ‘contractual holiday entitlement’ and should be set out in a worker’s written contract.
Bank/public holidays do not have to be given as paid leave and can be included as part of a worker’s statutory annual leave at the employer’s discretion.
Holiday entitlement continues to accrue whilst workers are on maternity, paternity, adoption, shared parental, ordinary parental and parental bereavement leave.
Calculating a week’s pay
Type of worker | Week’s pay calculation |
Fixed hours/pay Full or part time | A week’s pay. |
Shift work (fixed hours) – Full or part time | The average number of weekly fixed hours worked in the previous 52 weeks. This is paid at the average hourly rate.
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Casual workers Including zero hour contracts | Average pay from the previous 52 weeks. However, this can only include weeks in which a worker was paid (so don’t use in the 52-week calculation any weeks when no pay was earned, e.g. because the casual worker did not undertake any work in that week). NB: you can count back a maximum of 104 weeks. If a worker has been employed for fewer than 52 weeks, them simply use an average of the paid weeks that are available.
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For workers who are paid monthly, a week’s pay can be calculated by dividing the worker’s pay by the number of hours worked in that month. This gives you the average hourly pay. This can then be multiplied by the number of hours worked in a week to give the weekly pay calculation. This weekly pay calculation for the last 52 weeks will give the average week’s pay.
Irregular hours worker v part-year worker
Irregular hours worker = where the number of paid hours worked is wholly or mostly variable, as per the terms of the contract of employment. E.g. a waitress who works different hours each week. These workers will likely have ‘casual’ or ‘zero hours’ contracts.
Part year worker – as per the terms of the contract of employment, they work part of the year but there are also periods in which they are not required to work (and for which they are not paid). E.g. seasonal farm workers who only work and get paid during the spring and summer months.
Rates of pay
For leave years starting on or after 1 April 2024, leave must be calculated at a worker’s ‘normal’ rate of pay. According to the government website, ‘normal’ rate of pay includes commission, regular overtime payments, and any payments related to length of service or professional qualifications. It does not usually include bonus payments.
Rolled up holiday pay
Rolled up holiday is where an employer adds an extra amount to a worker’s regular pay in respect of their holiday entitlement instead of granting paid time off. Previously, this practice was not recommended as it was deemed to disincentivise workers from taking their leave entitlement (although lots of employers still used the practice).
As of 1 January 2024, rolled up holiday pay is now lawful, although not compulsory for irregular hours or part year workers. The following conditions need to be met:
- It has to apply to a leave year starting on or after 1 April 2024;
- It is to be paid at 12.07% of a worker’s normal pay (see above for the definition of ‘normal’ pay);
- It is to be paid in the pay period in which it accrues; and
- It should be calculated by reference to the total earnings during the pay period.
If an employer does not want to use rolled up holiday pay facility, they can continue to use the existing 52-week reference period to calculate holiday for irregular hour workers.
Carry Over
Generally speaking, some leave can be carried over in the following circumstances:
- There is a relevant agreement (e.g. workforce agreement, collective agreement) that allows for it;
- The written terms of employment allow for it;
- A worker is on long term sick leave (a maximum of 4 weeks can be carried over and must be used within 18 months of the date from when it was carried over);
- A worker isn’t able to use their entitlement for a statutory reason e.g. they are on maternity leave; or
- An employer does not allow a worker to take their entitlement.
Covid-19 Leave
For accrued leave that was untaken due to the Covid-19 pandemic, this must now be taken before 31 March 2024, otherwise it will be lost.
Good practice points
- Have written particulars of employment.
- Ensure that working patterns are clear in the worker’s particulars of employment.
- Ensure that bank/public holiday entitlement is dealt with in the particulars of employment.
- Workers should request leave dates as far in advance as possible. Generally speaking, workers should ask for holiday at least twice the amount of time beforehand as the amount they want to take off e.g. if you want to take off 5 days, you should request leave at least 10 days beforehand.
- If introducing rolled up pay, employers should ensure that they check their workers’ contracts to see if this would amount to a contractual variation that requires prior consultation. Rolled up pay should be clearly marked as a separate item on a worker’s payslip.