The sun is out – and it looks like it’s staying out for a while at least! Now is the time (especially if it’s the start of a new holiday year) to get holidays planned in and a timely reminder for us to provide some guidance on calculation of entitlement and pay.
Under new regulations effective from 1 April 2024, rules for calculating holiday entitlement and pay for irregular hours and part-year workers, such as zero hours workers and term time workers, have changed in the following ways:
- Annual holiday entitlement is accrued on the last day of each pay period at the rate of 12.07% of hours worked during that period (up to a maximum of 28 days per year).
- Rolled-up holiday pay is now permitted again – for irregular hour and part-year workers only – at 12.07% of all pay for work done. It must be paid at the same time as pay for the work done and set out separately on the payslip.
What is rolled-up holiday pay?
“Rolling up” of holiday pay involves spreading accrued holiday pay over the year by paying it monthly in addition to an employee’s hourly rate, as opposed to requiring an employee to take their holiday. This practice had previously been ruled unlawful, as it was considered that it might dis-incentivise workers to take annual leave.
Holiday pay
Workers are entitled to a week’s pay for each week of statutory leave that they take.
Most workers are entitled to 5.6 weeks’ paid holiday a year. You can use the holiday calculator to work out how much leave someone should get or give us a call if you want to check your workings out.
How to work out a week’s pay
A week’s pay is worked out according to the kind of hours someone works and how they’re paid for the hours. This includes full-time, part-time, term-time and casual workers.
| Working pattern | How a week’s pay is calculated |
| Regular hours and fixed pay (full- or part-time) | A worker’s pay for a week |
| Shift work with regular hours (full- or part-time) | The average number of weekly fixed hours a worker has worked in the previous 52 weeks, at their average hourly rate |
| Irregular-hours and part-year work | A worker’s average pay from the previous 52 weeks (only counting weeks in which they were paid) |
Calculating average hourly or weekly rate
To calculate average hourly rate, only the hours worked and how much was paid for them should be counted. Take the average rate over the last 52 weeks. A ‘week’ usually runs from Sunday to Saturday. Only use another 7-day period (like Thursday to Wednesday) if that’s how a worker’s pay is calculated.
If no pay was paid in any week, count back another week so the rate is based on 52 weeks in which pay was paid. You can count back a maximum of 104 weeks. If a worker has less than 52 weeks of pay, use the average pay rate for the full weeks they have worked.
Workers who are paid monthly
To work out a week’s pay for someone who’s paid monthly:
- Calculate the worker’s average hourly pay for the last month. Do this by dividing the month’s pay by the number of hours worked in the month.
- Calculate the weekly pay. Do this by multiplying the average hourly pay by the number of hours worked in a week.
Use the weekly pay calculation for each of the last 52 weeks to work out an average week’s pay.
‘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.
Regular-hours workers
For regular-hours workers (full- or part- time), you cannot include an amount for holiday pay in the hourly rate (known as ‘rolled-up holiday pay’). This is because the entitlement related to ‘time off’ i.e. rest period as per the Working Time Directive.
We are always on hand to answer any queries you may have in relation to calculation of holiday entitlement or pay. We can also advise those of you who are using the Breathe system in terms of managing holidays.
Please give one of our expert team a call or get in touch via our Contact Form.
