One of the most significant changes in recent years concerns "irregular hours" and "part-year" workers (such as term-time only staff). Following the Supreme Court ruling in Harpur Trust v Brazel, there was a period where the 12.07% accrual method was deemed unlawful, leading to anomalies where part-year workers could receive proportionately more holiday pay than full-time colleagues.
However, the government introduced new regulations effective for leave years beginning on or after 1 April 2024. These regulations effectively reinstated the 12.07% accrual method for irregular hours and part-year workers. Under this system:
This return to the percentage method simplifies administration significantly for zero-hours contracts and casual workforce management in 2026.
Historically, holiday pay was often calculated on "basic pay" alone. This changed following a series of EU and UK court rulings. In 2026, it is settled law that holiday pay must reflect "normal remuneration". This means that if a worker regularly works overtime, receives commission, or gets productivity bonuses, these must be factored into their holiday pay.
Specifically, for the first 4 weeks of statutory leave (derived from EU law), pay must include:
The remaining 1.6 weeks of statutory leave (a purely UK addition) can strictly be paid at the basic rate, although many employers simply apply the enhanced rate to the full 5.6 weeks for administrative simplicity.
Part-time workers are protected against less favourable treatment under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000. Their holiday entitlement is calculated strictly pro-rata to a full-time worker.
If a full-time worker gets 28 days (including bank holidays), a part-time worker working 3 days a week gets: 3 days × 5.6 weeks = 16.8 days. Employers cannot round this down; it must be rounded up to the nearest half-day or kept as a fraction. If bank holidays fall on days the part-time worker usually works, they must either be given the day off paid (deducted from entitlement) or, if the business is open, be given a day off in lieu.
Workers continue to accrue statutory holiday entitlement while they are off work sick, or on maternity, paternity, or adoption leave. This is a crucial right. If an employee cannot take their holiday due to long-term sickness, they are entitled to carry it over into the next leave year. The regulations generally allow this carry-over for up to 18 months from the end of the leave year in which it accrued.
Similarly, during maternity leave, holiday accrues as normal. It is often common practice for employees to tag their accrued holiday onto the beginning or end of their maternity leave to extend their paid time away from work.
The general principle for statutory holiday is "use it or lose it". The first 4 weeks of leave must usually be taken in the leave year it is due. The additional 1.6 weeks can be carried over to the following leave year if there is a written agreement between the employer and employee.
During the COVID-19 pandemic, emergency legislation allowed the carry-over of up to 4 weeks of leave for two years if it was not reasonably practicable to take it due to the virus effects. Note for 2026: These special COVID carry-over rules have expired. Any leave carried over under those specific provisions should have been used by March 31, 2024. The standard rules now apply fully.
Agency workers have specific rights under the Agency Workers Regulations 2010. From day one of an assignment, agency workers are entitled to statutory holiday. However, after a 12-week qualifying period in the same job with the same hirer, they become entitled to the same basic working and employment conditions as if they had been recruited directly by the hirer. This often means an increase in holiday entitlement if the permanent staff receive more than the statutory minimum.
When an employment contract terminates, the employer must pay for any statutory holiday accrued but not taken. This is one of the only times it is legal to pay cash in lieu of holiday (the other being the rolled-up pay method for irregular hours workers). The calculation for this payment relies on the proportion of the leave year that has passed.
Formula: (A ÷ B) × C - D
If a worker has taken more holiday than they have accrued by the time they leave, the employer may be entitled to deduct the overpayment from the final wage, provided this provision is clearly stated in the employment contract.
Failure to pay holiday pay is treated as an unlawful deduction from wages. Employees can bring a claim to an Employment Tribunal. However, there is a strict time limit: claims must usually be made within three months minus one day of the deduction (i.e., the date the holiday pay should have been paid). In cases of a series of deductions, the claim can cover the series, but a gap of more than three months between deductions can break the chain.
As of the regulations updated in April 2024, holiday pay for irregular hours and part-year workers can be calculated using the 12.07% accrual method based on hours worked in the pay period. This simplifies the previous averaging method. Employers can also utilize 'rolled-up' holiday pay, paying the 12.07% uplift in every payslip rather than when leave is taken, provided it is distinct on the payslip.
Yes. Following court rulings, holiday pay for the first 4 weeks of your statutory entitlement must be based on your 'normal remuneration'. This means if you regularly work overtime, receive commission, or get performance bonuses, these earnings must be included in the calculation. The calculation is based on your average earnings over the previous 52 weeks.
Almost all workers are entitled to 5.6 weeks of paid holiday per year. For a full-time worker working 5 days a week, this equals 28 days. This is the statutory cap; working 6 days a week does not increase the statutory entitlement beyond 28 days, although your employer may offer more.
Generally, the statutory 4 weeks cannot be carried over unless you were unable to take it due to sickness or maternity/family leave. The additional 1.6 weeks can be carried over if the employer agrees. COVID-19 specific carry-over rules have now ended, so any leave carried over under those terms should have been utilised.
For zero-hours workers, holiday is accrued based on hours worked. The most common and now legislatively supported method (since April 2024) is accruing 12.07% of hours worked as holiday entitlement. This effectively provides roughly 7 minutes of holiday for every hour worked.
Employers can choose to include the 8 bank holidays as part of your statutory 28-day entitlement. There is no automatic statutory right to be off on bank holidays or to be paid extra for working them, unless specified in your employment contract.
If you leave your job, you are entitled to be paid for any statutory holiday you have accrued but not taken. This is known as payment in lieu. Conversely, if you have taken more holiday than you accrued, your employer may deduct the difference from your final pay if your contract allows.