Frequently Asked Questions
What is the 52-week reference period?
The 52-week reference period takes the average of a worker's pay over the last 52 weeks in which they actually worked and received pay. Weeks without pay are excluded and earlier weeks substituted.
Why did the reference period change from 12 to 52 weeks?
The Employment Rights Act 2018 and Working Time (Amendment) Regulations 2020 extended the reference period to better reflect the earnings of workers with variable hours and seasonal work.
What was the Harpur Trust v Brazel ruling?
The 2022 Supreme Court ruling found that part-year workers (e.g. term-time teachers) could not have their holiday capped by 12.07% — their 5.6 weeks entitlement must be calculated using the reference period method.
What is rolled-up holiday pay?
Rolled-up holiday pay means paying 12.07% extra on each payslip to cover future holiday entitlement. From 1 January 2024 (The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023), this is legal for irregular hours and part-year workers.
What counts as a week's pay for irregular hours?
A week's pay is the average of earnings in the 52 reference weeks (excluding unpaid weeks). It includes all regular pay: wages, commission, regular overtime, and piece-rate pay.
Does overtime count in the reference period?
Yes — regular contractual overtime and guaranteed overtime must be included. Purely voluntary overtime that is genuinely irregular may not need to be included (Dudley MBC v Willetts).
How are zero-pay weeks handled?
Weeks where no pay was received are excluded from the reference period and replaced by going back further (up to 104 weeks). If fewer than 52 paid weeks exist, use only the paid weeks available.
Can employers use 12.07% for all workers?
No — 12.07% per hour worked only applies to irregular hours and part-year workers (from 2024). Regular workers on fixed hours must still have holiday calculated on their normal week's pay.
What about commission in holiday pay?
Regular commission that forms part of normal remuneration must be included in holiday pay. One-off bonuses may not need to be included unless they are linked to individual performance routinely.
What is a 'part-year worker'?
A part-year worker works for part of the year (e.g. term-time only, seasonal) but has a continuous contract throughout the year. The Harpur Trust ruling applies specifically to this group.
Can I bank unused holiday for irregular hours?
Workers can carry over holiday if unable to take it due to sickness or family leave. Employers should encourage regular holiday taking. Unused statutory leave may be paid out at termination.
Is this different from zero hours contract holiday?
Yes — irregular hours workers typically have a continuous contract. Zero hours workers may or may not have continuity. The calculation method is now the same for both from January 2024.