Holiday pay for variable and irregular hours
Holiday pay is the money you get while you take your paid leave, and it is separate from how much leave you are owed. If your hours or pay change week to week, working out a fair rate takes a bit more than dividing an annual salary. There are two methods in UK law, and which one applies depends on your working pattern.
The 52-week average method
For a week of leave, your holiday pay is your average weekly pay over the last 52 paid weeks. Add up the pay from those weeks and divide by 52. Weeks where you had no pay are ignored, so you count back further, up to 104 weeks, until you reach 52 paid weeks. For example, £6,240 earned across 52 paid weeks gives £120 a week, so a week of holiday is paid at £120. If you have worked for less than 52 weeks, use the number of weeks you have worked.
Rolled-up holiday pay at 12.07%
For leave years beginning on or after 1 April 2024, irregular-hours and part-year workers can be paid rolled-up holiday pay at 12.07% of the pay they earn in each period. The 12.07% comes from 5.6 weeks of statutory leave divided by the 46.4 working weeks in a year. So £2,000 of pay carries £241.40 of holiday pay (£2,000 × 12.07%). The holiday pay is added to each payslip as a separate line, so you are paid your holiday as you go rather than in a lump sum when you take leave.
Which method applies to you
Rolled-up holiday pay is only for irregular-hours and part-year workers, and only for leave years starting on or after 1 April 2024. An irregular-hours worker has pay hours that are wholly or mostly variable under their contract. A part-year worker works only part of the year with unpaid periods of at least a week. Everyone else uses the 52-week average, paid when they take their leave. If you are unsure which one your employer uses, check your contract or payslip, since the rolled-up amount should appear as its own line.
Overtime, commission and what counts as pay
For the first 4 weeks of statutory leave, holiday pay should match your normal pay, including regular overtime and commission. The remaining 1.6 weeks can be paid at basic pay. When you use the 52-week average, include variable pay in the total so the weekly figure reflects what you earn, not just your base rate.
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Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for UK and Australian readers.
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