A Jamie HR manager's guide

The manager's guide to holiday pay

A practical guide for managers and small businesses on statutory holiday entitlement, working out normal pay for holiday, rolled-up holiday pay for irregular hours and part-year workers, and carrying leave over correctly.
Normal pay explained
12.07% rolled-up pay
Who it applies to

Holiday pay looks simple until you have to calculate it.

Statutory holiday entitlement is set out in the Working Time Regulations 1998, reformed in 2024 to clarify how holiday pay is calculated and to introduce rolled-up holiday pay for a defined group of workers. This guide sets out the statutory minimum, what counts as normal pay, how rolled-up holiday pay works, who it can and cannot be used for, and how carry-over and record-keeping work in practice.

What's inside
What is statutory holiday?3
The two pots of leave4
What counts as normal pay5
Rolled-up holiday pay explained6
Getting eligibility right7
Calculating the 12.07% uplift8
Carrying leave over9
Holiday during sickness and family leave10
Practical payroll steps11
Getting holiday pay right12
How Jamie HR helps13

What is statutory holiday?

The legal minimum applies to every worker, and scales with how much someone actually works.
  • The statutory minimum is 5.6 weeks' paid holiday a year, equivalent to 28 days for a worker on a five-day week.
  • The combined statutory entitlement is capped at 28 days a year, even for a worker on a six or seven-day week.
  • A worker who works 3 days a week is entitled to at least 16.8 days a year (3 x 5.6 weeks).
  • Statutory holiday entitlement applies to workers as well as employees, not only to staff on a permanent contract.
  • Workers with irregular hours or part-year contracts build up leave based on hours actually worked, rather than a fixed number of days.
Manager tip
Set out each employee's or worker's holiday entitlement, and how it is calculated, in their written statement of employment particulars or contract.

The two pots of leave

The 5.6 weeks of statutory leave is made up of two legal pots, with different rules on pay.
  • 4 weeks come from regulation 13 of the Working Time Regulations 1998, often called the EU-derived leave, and must be paid at the worker's normal rate of pay.
  • 1.6 weeks come from regulation 13A, the UK-derived or additional leave, which the law allows to be paid at basic pay.
  • Many employers pay all 5.6 weeks at the normal rate rather than splitting the two pots, which is a legitimate approach.
  • The split still matters in practice: it shapes how normal remuneration is worked out, and the rules on rolled-up holiday pay are built on the same regulations.
Manager tip
If your business pays the full 5.6 weeks at normal pay rather than splitting the two pots, record that decision in your holiday policy so payroll applies it consistently.

What counts as normal pay

The Working Time Regulations set out exactly what a week's pay must include for the 4-week leave.
  • Normal remuneration must include payments intrinsically linked to tasks the worker is contractually required to carry out, including commission.
  • It must include payments relating to professional or personal status linked to length of service, seniority or qualifications.
  • It must include overtime that has been regularly paid to the worker.
  • For a worker with variable pay or hours, calculate their average pay over the 52 weeks in which they were actually paid, looking back up to 104 weeks to find 52 paid weeks if needed.
  • Where a worker has been employed for less than 52 weeks, use the average over however many complete weeks of pay they have.
Watch out
Leaving regularly paid overtime or commission out of a holiday pay calculation understates what is owed. Underpaying the 4-week EU-derived leave risks a claim for unlawful deduction from wages.

Rolled-up holiday pay explained

Rolled-up holiday pay adds holiday pay to every payslip instead of paying it when leave is taken.
  • Rolled-up holiday pay means an employer pays an extra amount on top of a worker's normal pay each pay period, instead of paying holiday pay separately when leave is taken.
  • The extra amount must be at least 12.07% of the worker's total pay for that pay period, including regularly paid overtime, commission and other payments that count as normal remuneration.
  • It must be shown as a clearly separate item on the worker's payslip.
  • It is paid at the same time as pay for the work done in that period, not held back or paid as a lump sum.
  • The 12.07% figure comes from dividing the statutory 5.6 weeks' leave by the 46.4 working weeks that remain in a 52-week year.
Manager tip
Introduce or change to rolled-up holiday pay only from the start of a leave year that begins on or after 1 April 2024, and confirm the change to affected workers in writing.

Getting eligibility right

Rolled-up holiday pay is only lawful for a specific category of worker, so getting this wrong misapplies the law.
  • Rolled-up holiday pay may only be used for irregular hours workers and part-year workers, as defined in the Working Time Regulations 1998, for leave years starting on or after 1 April 2024.
  • An irregular hours worker is someone whose paid hours in each pay period are wholly or mostly variable under the terms of their contract, for example a worker on a zero-hours, casual or bank contract.
  • A part-year worker is someone required to work only part of the year under a contract that stays in place all year round, with periods of at least a week when they are not required to work and are not paid, for example a seasonal worker.
  • A worker with fixed or largely fixed hours, including a part-time worker on set contracted hours, is not an irregular hours worker or a part-year worker, even though they work fewer hours than a full-time colleague.
Watch out
Rolled-up holiday pay is not a lawful way to pay holiday pay to a worker with normal, fixed hours, whether full-time or part-time. Rolling up holiday pay for a worker who does not meet the irregular hours or part-year worker definition does not discharge your duty to pay them for the leave they take, and risks a claim for unpaid holiday pay.

Calculating the 12.07% uplift

The uplift is calculated on the pay actually earned in each pay period, not a fixed weekly amount.
  • Multiply the worker's total pay for the pay period, including regularly paid overtime and commission, by 12.07% to find the rolled-up holiday pay due for that period.
  • For example, a worker paid £500 for a week's work is due at least £60.35 in rolled-up holiday pay for that week (£500 x 12.07%), shown as a separate line alongside the £500.
  • Recalculate the uplift every pay period, since it moves with the pay actually earned rather than staying a flat amount.
  • Where rolled-up pay is not used, calculate holiday pay for an irregular hours or part-year worker on their average pay over the previous 52 weeks in which they were paid.

Carrying leave over

Untaken statutory leave cannot usually be carried into the next leave year, but the law allows it in specific circumstances.
  • Without a relevant agreement, statutory leave must be taken in the leave year it is due; a relevant agreement, for example in a contract or workforce agreement, can allow further carry-over.
  • Where a worker cannot take leave because they were on sick leave, they can carry forward up to 4 weeks of untaken leave, provided they take it within 18 months of the end of the leave year in which it was accrued.
  • Where a worker cannot take leave because they were on family-related statutory leave, such as maternity, adoption, paternity, parental or shared parental leave, the untaken leave carries forward into the following leave year.
  • If an employer fails to give a worker a reasonable opportunity to take their leave, or fails to tell them that unused leave will be lost, the worker can carry that leave forward too.
Manager tip
Track carried-over leave separately from current-year entitlement, so an 18-month sickness carry-over deadline is not missed.

Holiday during sickness and family leave

Holiday keeps building up even when someone is not at work for these reasons.
  • Holiday continues to accrue while a worker is off sick or on family-related statutory leave.
  • A worker can choose to take paid holiday during sick leave, though they cannot be made to.
  • For an irregular hours or part-year worker, holiday accrued during a period of sick leave or statutory leave is based on their average weekly hours over the 52 weeks before that leave began, at 12.07% of those average hours for each week away.
  • For leave years starting on or before 31 March 2024, use a fair and reasonable method to work out accrual during such absences, since no fixed formula applied before that date.

Practical payroll steps

A few checks keep holiday pay compliant as pay periods and leave years turn over.
  • Classify each worker correctly as either on fixed hours, or as an irregular hours or part-year worker under the Working Time Regulations definitions, since this decides whether rolled-up pay can be used.
  • For workers with normal hours, pay their normal week's pay, including regularly paid overtime and commission, when they take the 4-week EU-derived leave.
  • For irregular hours and part-year workers using rolled-up pay, show the 12.07% uplift as a separate payslip line every pay period.
  • Keep records showing compliance with leave entitlement, leave taken, carry-over, holiday pay calculations and payments in lieu of leave, for at least six years from the date each record is made; this duty took effect on 6 April 2026 under the Employment Rights Act 2025.
  • Review a worker's classification when their hours or contract type change, since moving between fixed and irregular hours changes how their holiday pay should be calculated.

Getting holiday pay right

A summary of the essentials covered in this guide:
  • 5.6 weeks' statutory minimum, capped at 28 days, pro-rated for part-time work.
  • Normal remuneration for the 4-week EU-derived leave includes regularly paid overtime, commission and status payments.
  • Rolled-up holiday pay, at 12.07% of pay shown separately on the payslip, is only for irregular hours and part-year workers.
  • It is not lawful to roll up holiday pay for a worker with normal, fixed hours, whatever their weekly hours are.
  • Sickness-related carry-over is capped at 4 weeks and must be used within 18 months; family-leave carry-over runs into the next leave year.
  • Keep holiday records for six years under the Employment Rights Act 2025.

How Jamie HR helps

Holiday pay depends on getting the right calculation for the right worker, every pay period. Jamie HR keeps that consistent.
  • Holiday tracking that calculates entitlement and accrual, including for irregular hours and part-year workers.
  • Records held for you, so leave taken, carry-over and holiday pay calculations are ready if a query ever comes up.
  • Contracts and policies stored in one place, so everyone can see how holiday pay is worked out.
  • Carry-over reminders that flag leave nearing its 18-month deadline before it is lost.
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This guide is general information, accurate to the best of our knowledge as of 2026, and is not legal advice. Employment law changes and every situation is different, so for a specific case take professional HR or legal advice. Sources: ACAS, gov.uk, legislation.gov.uk and the Working Time Regulations 1998 (as amended).