UK workers get a week's pay for each week of statutory holiday. For fixed-hours workers, that's their normal weekly pay. For variable workers, it's the average of the previous 52 paid weeks. Holiday pay must include regular overtime, commission and shift premiums - not just basic salary.
1. The legal basis: a week's pay per week of leave
The right to paid holiday in the UK comes from the Working Time Regulations 1998. Regulation 16 states that workers are entitled to be paid at the rate of "a week's pay in respect of each week of leave". Sounds simple. The complexity is in how "a week's pay" is worked out - because that is governed by sections 221 to 224 of the Employment Rights Act 1996, which split workers into different categories depending on their hours and pay structure.
For most workers with fixed hours and fixed pay, a week's pay is just their normal weekly pay. But for workers whose pay varies - because of overtime, commission, shift premiums, or genuinely irregular hours - the calculation is built around an average of their recent earnings. The reference period for that average is 52 weeks.
The rule that catches employers out. Holiday pay is not "basic pay during leave". It is "the pay the worker would normally have received if they had been working". If overtime and commission are a regular part of someone's earnings, those must be reflected in their holiday pay - or you risk underpayment claims.
2. The four working patterns and how each is paid
The starting point for any holiday pay calculation is to work out which category the worker falls into. GOV.UK sets out four working patterns, each with its own method:
| Working pattern | How a week's pay is calculated |
|---|---|
| Regular hours, fixed pay (full or part-time) | The worker's pay for a week |
| Shift work with regular hours (full or part-time) | Average weekly fixed hours over the previous 52 weeks, multiplied by their average hourly rate |
| Irregular-hours work | Average pay over the previous 52 paid weeks (excluding weeks with no pay) |
| Part-year workers (term-time, seasonal) | Average pay over the previous 52 paid weeks (excluding weeks with no pay) |
If you employ different workers under different patterns, you may end up using more than one method - which is fine, but the approach must be consistent for each worker.
3. Fixed-hours, fixed-pay workers (the simplest case)
If a worker has the same hours and the same pay every week, with no variable elements, holiday pay is straightforward. They get the same pay during their holiday as they would have done if they had been at work.
For example, a worker on £500 a week for a 37-hour week with no overtime, commission or shift premium gets £500 for each week of holiday. If they take three days off in a five-day working week, they get 3/5 of £500 = £300 holiday pay.
The catch: this method only applies if the worker's pay is genuinely fixed. If they regularly earn overtime, commission, shift premium or any other non-discretionary additions on top of basic pay, you cannot use this method. You have to use the 52-week reference period method, even if their basic hours are fixed.
The "salary plus commission" trap. A salaried worker on £30,000 plus commission averaging £400 a month is not a fixed-pay worker for holiday pay purposes. Their holiday pay must reflect the commission element - which means averaging the last 52 paid weeks of total pay, not just basing it on the £30,000 salary.
4. The 52-week reference period explained
For workers whose pay varies - whether because of variable hours, overtime, commission, shift premiums or any other non-fixed element - holiday pay must be based on an average of their previous 52 paid weeks. This rule has applied since 6 April 2020, when it replaced the old 12-week reference period.
Here is how the calculation works in practice:
Take the start of the holiday
The reference period ends with the last full pay week before the holiday begins. A "week" runs from Sunday to Saturday by default, but you can use a different 7-day period if that's how the worker is paid.
Count back 52 weeks - but only paid weeks
Any week in which the worker received no pay must be excluded from the 52. If a worker was off sick on SSP only, on unpaid leave, or didn't work that week, that week is skipped and replaced by an earlier paid week.
Hard stop at 104 weeks
Employers can only look back as far as 104 weeks (two years) to find the 52 paid weeks. If there aren't 52 paid weeks in that window, use whatever paid weeks are available.
Add up the total pay across those 52 weeks
Include all elements of "normal" remuneration - basic pay, regular overtime, commission, shift premiums, length-of-service payments. Exclude one-off bonuses and expense reimbursements.
Divide by 52 to get a week's pay
The result is the worker's average week's pay for holiday purposes. Multiply by the number of weeks of holiday taken (or pro-rate for partial weeks).
Worked examples for each pattern
Sales rep on £35,000 base salary plus commission. Total pay over the last 52 paid weeks: £52,000.
Care worker, regular 38-hour shifts but earnings vary with weekend premiums. 52-week total: £24,960.
Hospitality worker, varies week to week. 47 paid weeks in the last 52 (5 weeks zero hours). Total earned in the 47 paid weeks plus 5 earlier paid weeks: £18,200.
School support worker, paid only during term-time. 39 paid weeks in the last 52, plus 13 earlier paid weeks. Total: £15,600.
Recalculate every time. The 52-week reference period is recalculated for each holiday booking. Earnings change, so the rate changes. Don't fix the rate at the start of the year and use it for every holiday request - that almost always produces an underpayment.
5. What counts as "normal" pay
The single biggest source of holiday pay disputes is what employers include - or, more often, exclude - from the calculation. Following a sequence of court rulings between 2014 and 2017, the law is clear: holiday pay must reflect "normal" remuneration, not just the basic contractual rate.
The leading cases are:
- Bear Scotland v Fulton (2014) - guaranteed and non-guaranteed regular overtime must be included
- British Gas Trading Ltd v Lock (2017) - results-based commission must be included
- Williams v British Airways (2011) - any payment "intrinsically linked to performance of the contract" must be included
The practical effect: if a worker regularly receives a pay element on top of their basic salary, that element is part of "normal pay" and must be averaged into their holiday pay.
| Pay element | Include in holiday pay? | Why |
|---|---|---|
| Basic salary or hourly pay | Yes | Always - this is the foundation |
| Guaranteed overtime | Yes | Required by Bear Scotland v Fulton |
| Non-guaranteed but regular overtime | Yes | Required by Bear Scotland v Fulton |
| Voluntary overtime (regularly worked) | Yes | Acas guidance - if it's a regular pattern |
| Voluntary overtime (occasional) | No | Not part of "normal" remuneration |
| Commission (results-based) | Yes | Required by British Gas v Lock |
| Shift premiums and unsocial-hours payments | Yes | Intrinsic to the role |
| Length-of-service payments | Yes | Intrinsic to the worker's role |
| Standby and call-out payments | Yes | If regularly received |
| One-off discretionary bonuses | No | Not regular or intrinsic |
| Expense reimbursements | No | Not pay - just covering costs |
| Benefits in kind | No | Continue to be received during holiday anyway |
6. The 4 weeks vs 1.6 weeks split
UK statutory holiday is 5.6 weeks. But in law it is split in two:
- Regulation 13 of the Working Time Regulations - the EU-derived 4 weeks. This must be paid at the worker's "normal" rate of pay.
- Regulation 13A of the Working Time Regulations - the UK top-up of 1.6 weeks. This can technically be paid at the "basic" contractual rate.
This split matters because it means a regular-hours worker who has overtime and commission can, in strict law, be paid:
- The first 4 weeks of holiday at their normal rate (basic + overtime + commission averaged)
- The next 1.6 weeks at their basic contractual rate only
Most employers don't do this. Tracking which holiday days are "Reg 13" vs "Reg 13A" is administratively painful, and the reputational and tribunal risk if you get it wrong outweighs the saving. Most employers pay all 5.6 weeks at the normal rate. If you do want to operate the split, document clearly which leave is which - and remember it does not apply to irregular-hours or part-year workers (all their leave is at normal rate).
For irregular-hours and part-year workers, this two-tier rule does not apply. All 5.6 weeks of their holiday must be paid at the normal rate. This was confirmed by the changes that took effect on 1 April 2024 in the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023.
7. Rolled-up holiday pay (2024 rules)
"Rolled-up" holiday pay is when an employer adds a percentage on top of normal pay to cover holiday, instead of paying for holiday separately when it's taken. For most of the post-2006 period this was unlawful, following the European Court of Justice ruling in Robinson-Steele v RD Retail Services. From 1 January 2024 (or the start of the leave year on or after 1 April 2024) it became legal again, but only for certain workers and only under strict conditions.
Who can be paid rolled-up holiday pay
- Irregular-hours workers - those whose number of paid hours is wholly or mostly variable each pay period
- Part-year workers - those whose contract requires them to work only part of the year, with periods of at least a week where they don't work and aren't paid (e.g. term-time-only staff)
Regular-hours workers cannot be paid rolled-up holiday pay. For them, holiday pay must still be paid at the time the holiday is taken.
How rolled-up holiday pay must work
Per Acas guidance, an employer using rolled-up holiday pay must:
- Calculate it at at least 12.07% of the worker's total pay in each pay period
- Pay it at the same time as the worker's normal pay for that pay period
- Show it as a separate line on the payslip
- Make sure the worker can still take their holiday entitlement (rolled-up pay does not change the right to time off)
The 12.07% figure is derived from the formula 5.6 ÷ (52 - 5.6) = 12.07%. It represents 5.6 weeks of holiday as a fraction of the 46.4 working weeks in the year. If a worker earned £1,000 in a pay period, their rolled-up holiday pay for that period would be £120.70.
Watch the sick pay interaction. If a rolled-up worker goes on sick leave or statutory family leave, their holiday pay during that period is based on the average rolled-up holiday pay they received in the 52 weeks before the leave started. Don't accidentally cut off their holiday accrual just because the rolled-up payments stop.
8. Five common mistakes employers make
Paying holiday at basic rate only. Excluding regular overtime, commission and shift premiums leads to systematic underpayment and tribunal claims going back up to two years.
Using a fixed rate for the year. The 52-week average changes each time the worker books holiday. Setting it once in January and using it all year almost always underpays.
Including weeks with no pay. If a worker took unpaid leave or was sick on SSP only, those weeks must be skipped and replaced by earlier paid weeks - up to a 104-week look-back.
Rolling up holiday pay for regular workers. Rolled-up holiday pay is only legal for irregular-hours and part-year workers. Doing it for fixed-hours staff is unlawful.
Forgetting the 12.07% on rolled-up pay. The minimum is 12.07%. Some employers still use 12% (the rough version) - but 12% is too low and creates the same underpayment exposure.
Not keeping records. Without 52 weeks of pay records per worker, you can't defend a holiday pay calculation if it's challenged. Keep weekly pay records for at least three years.
If you spot any of these in your current process, the safest course is to recalculate going back two years (the maximum claim window), pay any shortfall, and update the method going forward. Acting voluntarily is much cheaper than defending a tribunal claim - and tribunal awards on holiday pay can be substantial because they often cover an entire workforce, not just one individual.
For related reading on getting the entitlement side right, see our guide to calculating annual leave entitlement in the UK and the rules on part-time holiday entitlement. If you're working out a final-pay figure for a leaver, our leaver pay calculator article walks through the same 52-week method applied to termination.
Sources
Every figure and rule in this guide is taken from primary UK government, Acas or legislation sources. We don't cite secondary commentary or AI-generated content.
| Source | What it covers |
|---|---|
| GOV.UK - Holiday pay: the basics | The four working patterns and how a week's pay is worked out for each |
| Working Time Regulations 1998 | Regulations 13, 13A and 16 - the statutory basis for paid holiday |
| Employment Rights Act 1996 | Sections 221-224 - the definition of "a week's pay" |
| Acas - Calculating holiday pay | Practical guidance on the week's pay calculation |
| Acas - Holiday pay for irregular hours and part-year workers | The 52-week reference period and 104-week look-back rule |
| Acas - Rolled-up holiday pay | The 12.07% rule, payslip requirements, and which workers are eligible |
| GOV.UK - Calculating holiday pay for workers without fixed hours or pay | Detailed worked examples for the 52-week reference period method |
| Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 | The 2024 reforms - rolled-up holiday pay legalised, 12.07% accrual codified |
Frequently asked questions
Workers are entitled to a week's pay for each week of statutory leave they take. For fixed-hours workers, that's their normal weekly pay. For workers with variable hours or pay, it's the average of their previous 52 paid weeks. Holiday pay must include regular overtime, commission and other normal earnings, not just basic salary.
Since 6 April 2020, employers must average a worker's pay over the previous 52 paid weeks to calculate holiday pay for variable hours or pay. Weeks where no pay was received are excluded and replaced with earlier paid weeks. Employers can look back up to 104 weeks to find 52 paid weeks, but no further.
Yes. Holiday pay must reflect "normal" remuneration, which includes regularly worked overtime (guaranteed, non-guaranteed and regular voluntary), commission, shift premiums, and length-of-service payments. This was established by Bear Scotland v Fulton (2014) and British Gas v Lock (2017). One-off bonuses are not usually included.
UK statutory holiday is split into 4 weeks under regulation 13 of the Working Time Regulations (the EU-derived portion) and 1.6 weeks under regulation 13A (the UK top-up). For regular hours workers, the 4 weeks must be paid at the "normal" rate including overtime and commission. The 1.6 weeks can be paid at the "basic" contractual rate. Many employers pay all 5.6 weeks at the normal rate to avoid administrative complexity.
Rolled-up holiday pay is only legal for irregular hours and part-year workers, and only where the leave year began on or after 1 April 2024. It must be at least 12.07% of total pay in each pay period, paid at the same time as wages, and shown as a separate line on the payslip. For regular hours workers, rolled-up holiday pay remains unlawful.
If a worker has been employed for less than 52 weeks, the reference period is shortened to the number of full weeks they have been paid. For example, if a worker has been employed for 26 paid weeks, that is the period used. If they take holiday before completing a full week, the employer should pay an amount that fairly represents the worker's pay for the length of holiday taken.