How to Calculate Holiday Pay in 2026: the 52-Week Average, Overtime, 12.07% and Rolled-Up Pay

Holiday pay is where most UK payroll disputes start. Paying a salaried employee their normal salary while they're on holiday is easy; the trouble begins with overtime, commission, zero-hours staff, term-time workers and people who leave mid-year. This guide is for employers, payroll managers and workers who want to check the numbers in 2026. It explains what "a week's pay" means, how the 52-week reference period works, which extras must be included, how the 12.07% method and rolled-up holiday pay work for irregular-hours and part-year workers, and how to pay someone who leaves. How much leave people get is covered in our holiday entitlement guide; this page is about the money.

Quick answer

Workers get a week's pay for each week of statutory leave. If pay is fixed, that's normal weekly pay. If pay varies, average it over the last 52 weeks in which the worker was paid, skipping unpaid weeks and looking back no more than 104 weeks. In Great Britain, irregular-hours and part-year workers accrue leave at 12.07% of hours worked and can be paid rolled-up holiday pay.

• The first 4 weeks of leave must include regular overtime, commission and service or qualification payments

• The remaining 1.6 weeks can be paid at basic pay, though many employers pay all 5.6 weeks at normal pay

• Rolled-up pay: 12.07% of each period's pay, shown separately on the payslip, only for leave years from 1 April 2024

• Northern Ireland still uses a 12 weeks average and doesn't allow rolled-up pay

• Since 6 April 2026 employers must keep holiday and holiday pay records for 6 years

The rule: a week's pay for a week's leave

The Working Time Regulations 1998 give most workers 5.6 weeks of paid leave a year, capped at 28 days, and say each week of leave is paid at "a week's pay". That phrase does a lot of work. For someone on a fixed salary with no extras, a week's pay is simply their contractual weekly pay: annual salary divided by 52. For anyone whose pay goes up and down, the law requires an average, so that taking holiday doesn't leave them worse off than working.

The reason is policy, not arithmetic. Courts have said for years that if holiday pay is lower than normal earnings, workers are discouraged from taking their leave. That's why the extras that make up someone's normal take-home pay, such as regular overtime and commission, have to be built in.

Since 1 January 2024 the rules have been simpler in one respect: the regulations now spell out what belongs in the calculation. They split statutory leave into two pots. The first 4 weeks (regulation 13 leave) must be paid at normal pay. The remaining 1.6 weeks (regulation 13A leave) can be paid at basic pay, meaning wages without overtime, commission or other extras. Employers can pay everything at normal pay if they prefer, and many do, because tracking which pot a given day of leave came from adds admin for a small saving.

Holiday pay is ordinary earnings for tax purposes. It goes through PAYE with income tax and Class 1 National Insurance in the usual way, and for pension auto-enrolment it counts as qualifying earnings.

Holiday pay numbers to know (2026)

52 weeks

Reference period

paid weeks only

104 weeks

Maximum look-back

to find paid weeks

4 weeks

Paid at normal pay

incl. regular overtime and commission

12.07%

Irregular hours accrual

and rolled-up rate

What counts in "normal pay"

GOV.UK lists what normal pay includes for the first 4 weeks of leave:

• Commission, and similar payments linked to tasks the worker is required to do under their contract.
• Regular overtime, including voluntary overtime if it has been worked regularly. The test is whether it was paid regularly over the 52 weeks before the holiday.
• Payments linked to seniority, length of service or professional qualifications, such as a long-service supplement or a payment for holding a recognised qualification.
• Other regular payments that form part of normal remuneration, such as shift premiums that are routinely paid.

What usually stays out: one-off bonuses, discretionary annual bonuses, genuinely occasional overtime, and expenses that reimburse real costs (a mileage allowance repaying fuel isn't pay). A bonus that's really commission in disguise, paid monthly against sales targets the worker is employed to hit, is a different matter, and the safer course is to include it.

There's no fixed number of occasions that makes overtime "regular". The government's guidance ties it to the 52-week reference period, so look at the pattern across the year. Overtime worked most weeks, or in a predictable seasonal pattern, is regular. Two Saturday shifts in a year probably isn't. Where it's borderline, including it costs little and closes off a tribunal claim.

The 52-week reference period, step by step

When pay varies, you need an average weekly figure. GOV.UK sets out the method:

Working out average weekly pay

1. 1

   Count back from the first day of leave

   Start from the last complete week before the holiday. A week runs Sunday to Saturday unless your pay week is another 7-day period.

2. 2

   Skip weeks with no pay

   Weeks in which the worker earned nothing are ignored and you go back an extra week for each one. Sick-leave and family-leave weeks paid at a reduced rate are also left out and replaced with earlier weeks.

   Tip: Stop at 104 weeks. If you still haven't found 52 weeks paid weeks, use the paid weeks you have.

3. 3

   Add up the pay in those weeks

   Include basic pay and the normal-pay extras: regular overtime, commission, service and qualification payments.

4. 4

   Divide by the number of weeks

   Usually 52. For someone with less service, divide by the number of complete paid weeks they've worked.

5. 5

   Pay that amount per week of leave

   For part-week leave, pay the proportion of the week. A 5-day worker taking one day gets one-fifth of the weekly figure.

For monthly-paid workers whose pay varies, GOV.UK suggests converting to a weekly figure first: divide a month's pay by the hours worked that month to get an hourly rate, multiply by the hours worked in a week, and average the weekly amounts. Most payroll software does this automatically if you record hours and pay elements consistently.

If a worker has no complete paid week at all, for example someone who takes a day off in their first week, the employer has to pay a fair amount that reflects what they'd have earned. New starters with a few weeks' service are averaged over those weeks.

Worked example: overtime and commission

Sam works five days a week in a builders' merchant on a basic salary of £31,200 a year, which is £600 a week. Over the 52 paid weeks before his holiday he was paid £4,160 of regular weekend overtime and £2,080 of monthly sales commission.

For the first 4 weeks of leave in his leave year, each week of holiday must be paid at £720, or £144 a day. For the remaining 1.6 weeks, the legal minimum is his basic £600 a week, or £120 a day. Over a full year of statutory leave the minimum is £2,880 plus £960, which is £3,840. Paying all 5.6 weeks at £720 would cost £4,032, only £192 more, which is why many employers don't bother with the split.

The difference matters more for workers whose extras are a large share of pay, such as delivery drivers on heavy overtime or sales staff where commission is half their earnings. If Sam's commission were £15,600 a year instead, his normal weekly pay would be £980 and paying the 1.6 weeks at basic rate would save £608 a year, but at the cost of a more complicated payroll and more questions from staff.

If the employer pays only basic pay for all leave, Sam is underpaid £120 for every week of the first four. Over two years that's £960, and he could claim it in an employment tribunal as an unlawful deduction from wages.

Irregular-hours and part-year workers: 12.07%

Zero-hours staff, casual bank workers and seasonal or term-time staff are where the 2024 reforms made the biggest change. For leave years starting on or after 1 April 2024, Great Britain has two special categories:

• An irregular-hours worker is someone whose paid hours in each pay period are wholly or mostly variable under their contract, such as a zero-hours or casual worker. A fixed rotating rota, say 15 hours one week and 20 the next, doesn't count, because the hours are predictable.
• A part-year worker is contracted to work only part of the year, with at least one week in the contract that is unpaid and not worked. Term-time staff in schools are the classic example, even if their hours in term are fixed.

For these workers, holiday accrues at 12.07% of the hours actually worked in each pay period. The percentage comes from dividing 5.6 weeks of leave by the 46.4 weeks a full-timer is at work. The government's guidance tells you to divide the hours by 100, multiply by 12.07 and round to the nearest hour. A worker who does 68 hours in June accrues 8 hours of leave.

Regular hours vs irregular hours and part-year (Great Britain)

	Regular-hours worker	Irregular-hours or part-year worker
Entitlement	5.6 weeks, pro rata for part-timers	12.07% of hours worked each pay period
Pay rate for leave	4 weeks at normal pay, 1.6 weeks at basic	All leave at normal pay
Average over	52 weeks paid weeks (if pay varies)	52 weeks paid weeks
Rolled-up holiday pay	Not allowed	Allowed: 12.07% added each pay period
Carry-over if sick	Up to 4 weeks within 18 months	Up to 5.6 weeks within 18 months

Entitlement

Regular-hours worker

5.6 weeks, pro rata for part-timers

Irregular-hours or part-year worker

12.07% of hours worked each pay period

Pay rate for leave

Regular-hours worker

4 weeks at normal pay, 1.6 weeks at basic

Irregular-hours or part-year worker

All leave at normal pay

Average over

Regular-hours worker

52 weeks paid weeks (if pay varies)

Irregular-hours or part-year worker

52 weeks paid weeks

Rolled-up holiday pay

Regular-hours worker

Not allowed

Irregular-hours or part-year worker

Allowed: 12.07% added each pay period

Carry-over if sick

Regular-hours worker

Up to 4 weeks within 18 months

Irregular-hours or part-year worker

Up to 5.6 weeks within 18 months

This method reversed the effect of the Supreme Court's 2022 decision in Harpur Trust v Brazel, which had meant a part-year worker was entitled to the full 5.6 weeks regardless of how many weeks they worked. A term-time teaching assistant working 30 hours a week for 39 weeks now accrues about 141 hours of leave (1,170 hours × 12.07%), roughly 4.7 weeks of their usual hours, rather than 5.6 weeks.

When they take leave, irregular-hours and part-year workers must be paid at normal pay for all of it, not just four weeks. Average their pay over the 52 paid weeks in the same way as above. Where a worker takes maternity, other family leave or sick leave, the guidance gives a separate formula to work out how much leave accrues during that time, using average hours over the previous 52 working weeks.

Rolled-up holiday pay

Rolled-up holiday pay means paying the holiday element with each pay packet, instead of when the worker takes time off. It was effectively banned for two decades. Since the 2024 reforms it's lawful in Great Britain again, but only for irregular-hours and part-year workers, and only in leave years beginning on or after 1 April 2024.

To use it lawfully, the employer must:

• pay holiday pay at 12.07% of the worker's total pay for the pay period, including the extras that count as normal pay;
• show it as a separate line on the payslip, not folded into a higher hourly rate;
• pay it at the same time as the wages for the work done; and
• still let the worker take their leave. They're paid nothing extra when they're off, because the holiday pay has already been paid, but the employer must not discourage them from taking it.

Worked example. Ravi is 23 and works casual shifts in a hotel at £12.71 an hour. One week he works 28 hours, earning £355.88. His rolled-up holiday pay is £355.88 × 12.07% = £42.95, shown on the payslip as a separate "holiday pay" line. The following week he works 12 hours at the same rate (£152.52) and receives £18.41 holiday pay. When he takes a week off in August, he receives no pay for that week, but he has been paid for it throughout the year.

Rolled-up pay isn't compulsory. Many employers of casual staff still accrue leave in hours and pay it when it's taken, using the 52-week average. That keeps holiday pay flowing when the worker is actually on holiday, which some workers prefer. Whichever method you use, you'll need to check the contract: switching to rolled-up pay may require a contract variation, and workers should be told in advance. Remember too that the holiday pay line doesn't count towards the National Minimum Wage: Ravi's basic hourly rate must be at least £12.71 an hour before the 12.07% is added.

Worked example: a zero-hours worker with gaps

Leah works zero hours in a bar. She asks for a week's holiday in October. Counting back, payroll finds that she had no shifts for 6 weeks over the summer while she was travelling, so the look-back runs 58 weeks to collect 52 paid weeks. Her total pay in those 52 weeks, including regular late-shift premiums, was £13,520.

Her average weekly pay is £13,520 ÷ 52 = £260. A full week of holiday is paid at £260. If she accrues and takes leave in hours rather than weeks, her employer can convert the weekly figure to an hourly rate using her average weekly hours over the same period. If she had only been employed for 20 weeks, payroll would divide her pay over those 20 paid weeks by 20.

If Leah had been off sick for 3 of those weeks on Statutory Sick Pay only, those weeks would also be skipped and replaced with earlier paid weeks, because SSP weeks would drag the average down. The same applies to weeks of statutory maternity or paternity pay.

Paying holiday when someone leaves

When employment ends, a worker is entitled to payment in lieu for statutory leave accrued but not taken in the current leave year. This is the only time statutory leave can be replaced with money.

For a regular-hours worker, work out the proportion of the leave year they've worked, apply it to their annual entitlement, subtract leave taken, and pay the balance at a week's pay per week. A full-time employee who leaves exactly halfway through a leave year has accrued 14 days. If they've taken 10, the employer owes 4 days. At a daily rate of £144, that's £576.

For an irregular-hours or part-year worker on the accrual method, total the hours accrued at 12.07% in the leave year, subtract hours taken, and pay the balance at their average rate. If they were on rolled-up pay, there's nothing more to pay, because the holiday pay has already gone out with each payslip.

Contracts can allow the employer to recover pay for leave taken in excess of accrual when someone leaves, but only if there's a written agreement covering it. Without one, the overpayment generally can't be clawed back. Payment in lieu goes through payroll as normal earnings, so it's taxed and subject to National Insurance; see our P45 guide for the final payslip.

Northern Ireland is different

Employment law is devolved in Northern Ireland, and the Great Britain reforms of 2024 weren't extended there. nidirect says that if pay varies, holiday pay is the average weekly wage over the previous 12 weeks, not 52, ignoring weeks with no pay. Normal pay includes guaranteed and non-guaranteed overtime, commission and work-related travel payments, and voluntary overtime may count if it forms part of normal remuneration.

nidirect also says employers can't build holiday pay into the hourly rate. Rolled-up holiday pay remains off-limits for Northern Ireland workers, including casual and zero-hours staff, and contracts that still use it should be renegotiated. Employers with staff on both sides of the Irish Sea need two holiday pay setups in their payroll software.

Northern Ireland also doesn't have the two-year backstop on holiday pay claims that applies in Great Britain. In the 2023 Agnew case, which began as a claim by Police Service of Northern Ireland officers, the Supreme Court decided that a gap of more than three months between underpayments doesn't break a "series of deductions". That makes historic claims in Northern Ireland potentially very large.

Common mistakes and how they get fixed

Most holiday pay errors come from a short list:

• Paying basic pay only to staff with regular overtime or commission. The fix is to recalculate the normal-pay weeks for the period you can be challenged on and pay arrears through payroll.
• Using a 12-week reference period in Great Britain. The 12-week period was replaced by 52 weeks in April 2020. Some old payroll configurations still use 12.
• Paying rolled-up holiday pay to regular-hours staff, or burying it in an uplifted hourly rate. It's only lawful for irregular-hours and part-year workers, and it must be a separate payslip line. Otherwise the employer can be ordered to pay the holiday again when it's taken.
• Classifying a fixed rota as irregular hours. If the pattern is predictable, the 12.07% method doesn't apply.
• Counting sick or SSP weeks in the reference period, which lowers the average.
• Forgetting holiday on leaving, or deducting excess leave without a written agreement.

In Great Britain, a worker can bring an unlawful deductions claim to an employment tribunal, which is limited to the 2 years before the claim under the Deduction from Wages (Limitation) Regulations 2014. Since the Agnew ruling, a series of underpayments isn't broken just because months pass between them, so claims can reach back the full two years. From 1 October 2026, the time limit for bringing most tribunal claims is 6 months, so workers have longer to act once the last underpayment happens.

Records and enforcement from 2026

The Employment Rights Act 2025 added two duties that change the risk for employers. Since 6 April 2026, employers in Great Britain must keep records adequate to show they've complied with annual leave and holiday pay rules, and keep them for 6 years. In practice that means keeping, for each worker, the leave year, entitlement, leave taken, carry-over, and the figures behind every holiday payment, including which pay elements were included and the reference period used.

How the holiday pay rules have changed

6 April 2020

GB reference period for variable pay extended from 12 to 52 weeks

1 January 2024

Normal pay vs basic pay split written into the regulations

1 April 2024

12.07% accrual and rolled-up pay for irregular-hours and part-year workers (leave years from this date)

6 April 2026

Duty to keep holiday and holiday pay records for 6 years

7 April 2026

Fair Work Agency launched

1 October 2026

Tribunal time limit for most claims becomes 6 months

The Fair Work Agency was set up on 7 April 2026. The government consulted between 30 June and 22 September 2026 on how the agency would enforce statutory holiday pay, and the consultation is now closed while the government considers responses. Law firm summaries of the proposals describe enforcement starting in 2027, with the power to investigate across a whole workforce, issue notices of underpayment and penalties, and look back up to six years to match the record-keeping period. They also say a penalty would not normally be charged where an employer has repaid arrears in full before an investigation starts. Those details aren't final until the government publishes its response.

Official links

• Holiday pay (GOV.UK)A week's pay, 52-week average, normal vs basic pay
• Holiday pay and entitlement reforms from 1 January 202412.07%, rolled-up pay, worked examples
• Calculate holiday entitlementGOV.UK calculator
• Holiday pay compliance and enforcement consultationFair Work Agency proposals
• nidirect: Taking your holidaysNorthern Ireland 12-week rule

What to do next

Pull last year's pay data for a handful of workers with variable pay, rerun the calculation by hand using the steps above, and compare it with what payroll actually paid. If there's a gap, fix the setup now and pay arrears voluntarily: it's cheaper than a tribunal claim and, under the proposed Fair Work Agency model, should avoid a penalty. Check entitlement with our holiday entitlement guide, make sure payslips show any rolled-up holiday pay clearly using our payslip requirements guide, and use the salary slip generator to set out the holiday line for staff.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How is holiday pay calculated in the UK?

A worker gets a week's pay for each week of statutory leave. If pay is fixed, that's simply normal weekly pay. If pay varies, you average pay over the last 52 weeks in which the worker was paid, skipping unpaid weeks and looking back up to 104 weeks. For the first 4 weeks of leave the average must include regular overtime, commission and service-related payments; the other 1.6 weeks can be paid at basic rate.

Does overtime count towards holiday pay?

Regular overtime does, for at least 4 of the 5.6 weeks of statutory leave. That covers compulsory overtime and voluntary overtime that has been worked regularly over the 52-week reference period. Genuinely occasional overtime can be left out. Employers can choose to include overtime in all 5.6 weeks, which is simpler and avoids disputes.

What does 12.07% holiday pay mean?

12.07% is the share of hours worked that irregular-hours and part-year workers accrue as holiday in leave years starting on or after 1 April 2024. It comes from 5.6 weeks of leave divided by the 46.4 weeks a year a full-time worker is actually at work. The same percentage is used for rolled-up holiday pay, where 12.07% of each pay period's earnings is paid as a separate holiday pay line.

Is rolled-up holiday pay legal?

In Great Britain, yes, but only for irregular-hours and part-year workers, and only in leave years starting on or after 1 April 2024. The holiday element must be 12.07% of pay for the period, shown as a separate item on the payslip, and paid with the wages for work done. It is not allowed for workers with regular hours. In Northern Ireland, nidirect says holiday pay can't be added to the hourly rate.

How is holiday pay worked out when someone leaves?

On leaving, a worker is paid for statutory holiday accrued but not taken in the current leave year. For regular-hours staff, work out the pro-rata entitlement for the part of the year worked, subtract leave taken and pay the balance at a week's pay per week. For irregular-hours and part-year workers, accrued hours at 12.07% minus hours taken gives the balance.

Do bonuses count for holiday pay?

Usually not. GOV.UK says normal pay includes commission, regular overtime and payments for length of service or professional qualifications, but usually not bonuses. A bonus that is in effect commission, paid regularly and linked to the work the worker is required to do, may need to be included. One-off or annual discretionary bonuses normally are left out.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 13 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Holiday entitlement: holiday pay — GOV.UK · accessed 13 October 2026
2. 2.Holiday pay and entitlement reforms from 1 January 2024 — Department for Business and Trade · accessed 13 October 2026
3. 3.Make Work Pay: holiday pay compliance and enforcement (consultation) — Department for Business and Trade · accessed 13 October 2026
4. 4.Taking your holidays — nidirect · accessed 13 October 2026
5. 5.The Deduction from Wages (Limitation) Regulations 2014 — legislation.gov.uk · accessed 13 October 2026
6. 6.Holiday pay claims: a series of deductions — Browne Jacobson · accessed 13 October 2026
7. 7.Holiday pay enforcement in the UK: consultation launched on role of Fair Work Agency — Littler · accessed 13 October 2026