The basic entitlement
The statutory minimum is 5.6 weeks of paid leave a year: 4 weeks derived from EU law plus 1.6 weeks UK addition, capped at 28 days. Bank holidays can count toward it if the contract says so, there is no separate statutory right to bank holidays off. Part timers get 5.6 weeks of their own working pattern, so a 2 day a week worker gets 11.2 days. Entitlement accrues from day 1 and cannot be bought out with money except on termination.
Holiday pay must reflect real earnings
A week of holiday pay means a week of normal remuneration. For fixed hours and fixed pay, that is simply the usual week. Where pay varies, use the average of the last 52 paid weeks, skipping weeks with no pay and looking back up to 104 weeks to assemble 52. Case law requires regular overtime, commission and shift premiums to be included, at least for the first 4 weeks of the entitlement; paying basic only remains the single most common holiday pay error and builds up a 2 year back pay exposure.
Irregular hours: the 12.07% regime
For leave years starting on or after 1 April 2024, irregular hours and part year workers, most zero hours staff, casuals and term time only roles, accrue holiday at 12.07% of hours worked in each pay period, capped at 5.6 weeks. The 12.07% figure is 5.6 divided by the 46.4 working weeks of the year. This replaced the discredited practice of averaging over calendar weeks that produced windfalls for part year workers.
Rolled up holiday pay is back
For those same irregular and part year workers only, rolled up holiday pay is lawful again: add 12.07% to the worker's pay each payday, show it as a separate itemised line on the payslip, and pay it in every period including sick and family leave periods based on the average. The worker still has the right to take the time off, it is simply unpaid when taken because the pay came early. For regular hours staff, rolling up remains unlawful and the leave must be paid when taken.
Carry over, sickness and termination
Workers who could not take leave because of sickness can carry 4 weeks forward, to be used within 18 months. Leave untaken because you failed to give a reasonable opportunity, or failed to warn it would be lost, carries over indefinitely, so send use it or lose it reminders in writing. On termination, accrued untaken statutory holiday must be paid out using the formula in the regulations, and a contract can require repayment of over taken holiday only if it says so explicitly. See the leavers checklist for the final pay mechanics.
Practical payroll setup
Configure your software with the correct worker categories, because the accrual engine differs for irregular staff, and keep the 52 week history it needs for averages. Itemise rolled up holiday pay separately or it does not count as paid at all. And when April's minimum wage rise lands, remember holiday pay averages rise with it. If the case law makes your head spin, our payroll service calculates entitlement and pay for every worker type as part of the standard run.
Frequently asked questions
How much holiday is a UK worker entitled to?
5.6 weeks a year, which is 28 days for someone working 5 days a week, and can include bank holidays. Part timers get the same 5.6 weeks pro rated: 3 days a week means 16.8 days.
How is holiday pay calculated for variable pay?
Using average weekly pay over the last 52 paid weeks, ignoring unpaid weeks and looking back up to 104 weeks to find 52 paid ones. Regular overtime and commission must be included in the calculation, not just basic pay.
Is rolled up holiday pay legal now?
Yes, but only for irregular hours and part year workers, for leave years starting on or after 1 April 2024. You add 12.07% to each payslip, itemise it separately, and the worker still takes actual unpaid time off. For regular hours staff it remains unlawful.