Holiday pay is worked out in two parts: how much leave a worker is entitled to, and what a week of that leave is worth. Almost all workers get 5.6 weeks of paid holiday a year, and a week's holiday pay is a normal week's pay for someone on fixed hours, or an average over the previous 52 paid weeks where pay varies. Irregular-hours and part-year workers follow a separate 12.07% method. This guide explains each calculation so a small employer can get it right on the payslip.
Key takeaways
- Statutory leave is 5.6 weeks a year, capped at 28 days.
- Part-time workers get the same 5.6 weeks, pro rata.
- Variable pay means averaging the previous 52 paid weeks, looking back up to 104 weeks.
- Irregular-hours and part-year workers accrue holiday at 12.07% of hours worked.
- Untaken statutory holiday is paid when employment ends.
What is statutory holiday pay?
Statutory leave is the minimum paid time off the law gives almost every worker, including employees, agency workers and people on zero-hours contracts. Holiday pay is what they receive for that time. The principle is that a worker should not be worse off for taking a week's leave than for working it. GOV.UK sets out the rules in holiday entitlement. You can offer more than the minimum in a contract, but never less.
How much leave: entitlement by working pattern
A worker on 5 days a week gets 5.6 weeks multiplied by 5 days, which is 28 days. That is also the cap, so someone working 6 days a week still has a statutory entitlement of 28 days. A part-time worker gets 5.6 weeks of their own working week: 3 days a week gives 16.8 days. Bank holidays can be included in the total and do not have to be given on top.
For anything less straightforward, such as a mid-year starter, GOV.UK has a holiday entitlement calculator.
How much pay: fixed hours and fixed pay
Where a worker has fixed hours and fixed pay, a week's holiday pay is a normal week's pay. A salaried full-timer simply carries on being paid as usual while on leave. A part-timer on the same three days every week is paid for those three days. No averaging is needed.
How much pay: variable hours or variable pay
If pay changes from week to week, because of shifts, overtime or commission, use an average. Take the worker's pay over the previous 52 weeks in which they were paid and divide by 52. Weeks with no pay are skipped, and you go back further to find a replacement, up to a maximum of 104 weeks before the holiday. If there are fewer than 52 paid weeks in that time, average the complete weeks you have. GOV.UK explains the method in holiday pay: the basics.
In practice this means your payroll records need to hold at least two years of weekly pay history for anyone whose pay varies.
Irregular-hours and part-year workers: the 12.07% method
For leave years starting on or after 1 April 2024 there is a separate method for irregular-hours workers, whose paid hours are wholly or mostly variable under their contract, and part-year workers, such as term-time staff. Their holiday accrues at 12.07% of the hours worked in each pay period, rounded up to the nearest hour where the result includes half an hour or more.
For these workers only, employers may use rolled-up holiday pay. Instead of paying when leave is taken, you add 12.07% to the worker's pay for work done in each pay period, and show it separately on the payslip. The worker must still be allowed and encouraged to take time off. See payslips and RTI reporting explained for what a payslip has to show.
Entitlement and pay by worker type
| Worker type | Statutory entitlement | How pay is calculated |
|---|---|---|
| Fixed hours, 5 days a week | 5.6 weeks, which is 28 days | A normal week's pay for each week of leave |
| Part-time, fixed days | 5.6 weeks pro rata, for example 16.8 days for 3 days a week | A normal week's pay for their own working week |
| Regular contract, variable pay | 5.6 weeks | Average pay over the previous 52 paid weeks |
| Irregular hours or part-year | Accrues at 12.07% of hours worked in each pay period | 52 week average when leave is taken, or rolled-up pay of 12.07% |
Step by step: calculating holiday pay
- Identify the worker type. Fixed hours, variable pay, or irregular hours and part-year. The contract and the actual pattern of work decide this.
- Confirm the leave year. Use the dates in the contract. This decides when entitlement resets.
- Work out the entitlement. 5.6 weeks of the worker's week, or 12.07% of hours worked.
- Decide how bank holidays are treated and apply the same rule to everyone.
- Calculate a week's pay. Normal pay, or the 52 paid week average.
- Pay it at the right time. Workers must receive holiday pay when they take leave, unless rolled-up pay lawfully applies.
- Show it on the payslip and process it through payroll with tax and National Insurance as normal.
- Keep a running record of leave accrued, taken and remaining for each worker.
- Settle up on leaving. Pay any accrued statutory holiday not taken in the final pay run.
Worked example (illustrative)
"Copperfield Coffee Ltd", an illustrative example, is a small café with three workers. The hourly rate used below is chosen only to make the sums easy to follow.
The manager works 5 days a week on a fixed £560 a week. Her entitlement is 28 days and each week of leave is paid at £560.
The barista works the same 3 days every week. His entitlement is 5.6 multiplied by 3, which is 16.8 days. A week's leave uses 3 of those days and is paid at his normal weekly pay.
The weekend assistant is on a zero-hours contract and works whatever shifts are offered, so she is an irregular-hours worker. In October 2026 she works 50 hours at £14 an hour and earns £700. She accrues 12.07% of 50 hours, which is 6.04 hours and so counts as 6 hours of holiday. The café uses rolled-up holiday pay for her, so it adds 12.07% of £700, which is £84.49, as a separate line on her October payslip. Her gross pay for the month is £784.49.
The company, people and figures are invented for illustration and are not a real client.
Common mistakes
- Giving part-timers a flat number of days. Their entitlement is 5.6 of their own working weeks.
- Using 12.07% for everyone. It applies only to irregular-hours and part-year workers.
- Using rolled-up pay for regular-hours staff. They must be paid when they take leave.
- Hiding rolled-up pay in the hourly rate. It must be a separate item on the payslip.
- Including unpaid weeks in the average. Skip them and look further back.
- Forgetting leavers. Accrued untaken statutory holiday is payable when employment ends.
- Leaving holiday out of the hiring budget. Paid leave is part of the true cost of an employee.
How we can help
We run payroll for small employers, including holiday pay calculations, rolled-up pay shown correctly on payslips and final pay for leavers. If you are taking on staff for the first time, start with our guide to first employee payroll setup, and see statutory sick pay and employee leave basics for other types of leave. Payroll starts from £25 per month per employee on a fixed fee. See our payroll service, view our pricing, or contact us to have your holiday pay set up correctly.
Frequently Asked Questions
How much paid holiday are workers entitled to?
Almost all workers are legally entitled to 5.6 weeks of paid holiday a year, known as statutory leave. For someone working 5 days a week that is 28 days, and the statutory entitlement is capped at 28 days. Part-time workers get 5.6 weeks pro rata, so someone working 3 days a week gets 16.8 days.
Do bank holidays have to be given on top of the 28 days?
No. Employers can include bank holidays within the 5.6 weeks of statutory leave, so a full-time worker might have 20 days to book plus 8 bank holidays. Whether bank holidays are included or additional depends on the employment contract, so check what yours says and apply it consistently to part-time staff as well.
How do I calculate holiday pay for someone with variable hours?
Use their average weekly pay over the previous 52 weeks in which they were paid. Skip any week with no pay and go back further to replace it, looking back up to 104 weeks in total. If the worker has fewer than 52 paid weeks, average the complete weeks they have actually worked.
What is the 12.07% holiday accrual method?
It is the method for irregular-hours and part-year workers in leave years starting on or after 1 April 2024. Holiday builds up at 12.07% of the hours worked in each pay period, so the entitlement tracks the work actually done. It does not apply to staff with regular hours, whether full-time or part-time.
Is rolled-up holiday pay allowed?
Yes, but only for irregular-hours and part-year workers, for leave years starting on or after 1 April 2024. The employer pays an extra 12.07% on top of pay for work done, at the same time as that pay, and must show it as a separate item on the payslip. Other workers must be paid when they take leave.
Related reading
How Berber Accounts & Tax helps
We are a London-based, specialist gig-economy and MTD accounting practice working with fixed monthly fees. If you would like this handled for you rather than doing it yourself, we can help.
Schedule a consultation →Written by the Berber Accounts & Tax team, 124 City Road, London EC1V 2NX, United Kingdom.
Last reviewed: 9 October 2026.
This article is general information, not personal tax advice. Speak to a qualified accountant about your own circumstances before acting on it.