What is the rule for holiday pay in the UK?

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UK workers are entitled to paid holiday leave.

All “workers” (employees and certain other individuals including agency workers) are entitled to 5.6 weeks’ paid holiday (or “annual leave”) a year. They’re entitled to a week’s pay for each week of holiday leave they take.  What is a “week’s pay” for these purposes isn’t always clear.

What is annual leave?

All workers are entitled to 5.6 weeks’ paid holiday a year, known as annual leave.  Some employers will give more holiday in the contract, but this is the minimum statutory entitlement. The 5.6 weeks can include bank/public holidays.

The entitlement is pro rated if you work only part of the holiday year – so if you start or leave your job during the holiday year, you’re entitled to the amount of holiday that accrues during the part of the year for which you worked.

The entitlement is 5.6 times your normal weekly working days.  So, if you work 3 days a week your annual holiday entitlement is 5.6 times 3 days.

Is holiday pay mandatory in the UK?

Yes. You should be paid your normal pay for all time spent on holiday within your annual holiday entitlement.

Do you get holiday pay on a zero hours contract?

Yes.  If you’re a “worker” (i.e. employee or certain other individuals including agency workers), you’re entitled to 5.6 weeks’ paid holiday a year. If you’re a zero hours worker, it’s just harder to calculate your holiday entitlement because your hours are irregular.  Your employer will need to calculate how many hours you’ve worked over the last 52 weeks in which you’ve been paid (out of the last 104 weeks), and pay you your average daily or weekly pay for each day or week’s holiday. If you’ve been working for less than 52 weeks, your employer should work out your average hours based on the time you have worked for.

Your holiday pay will depend on a number of factors including the hours that you work.

How do you calculate holiday pay?

For some workers it is straightforward: if they are paid a regular amount each week or month, that doesn’t change regardless of the number of hours they work, then you can work out their daily rate of pay and they just get that amount per holiday day.

It’s more complicated – much more complicated – for workers who work irregular hours/days, or who sometimes get overtime, certain types of commission, or other payments.

There are calculators online that will help, but the basic rule is that you have to take the average number of hours or days worked a week over the last 52 weeks in which you worked (e.g. weren’t off sick and on nil pay/SSP only), and work out the average hourly or daily pay.  That average pay is what you should be paid for holiday days.

Is rolled up holiday pay legal?

For workers with irregular working patterns, such as casual workers or zero hours workers, employers would often “roll up” holiday pay into their normal pay by adding 12.07% to their pay in order to pay off the paid holiday entitlement as they went.  The idea was that the worker wasn’t working all the time so was getting “breaks” from work, and by rolling up holiday pay, the employer was paying for that “break” and so ticking the box in terms of giving paid holiday.

However, it meant that the worker didn’t receive holiday pay at the time the holiday is taken.  The Supreme Court has now decided that it is wrong to roll up holiday pay.

As such, not only are workers entitled to be paid at the time they are actually taking time off work, their holiday pay must be calculated based on the average pay for the last 52 weeks in which they have worked.

Employment Law Solicitor

If you need more help with the subjects covered here then do reach out to our expert online employment law solicitors. You can email us at employment@qlaw.co.uk or call 03300 020 863.

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