To work out holiday pay for a leaver: take their accrued entitlement (annual allowance prorated to the leaving date), add carried-over leave, subtract days already taken, then multiply the remaining days by a day's pay. This goes into final pay as payment in lieu.
How this calculator works
When an employee leaves, the employer must pay them for any statutory holiday they have built up but not taken. GOV.UK is explicit that employers must pay for untaken statutory leave, even if the worker is dismissed for gross misconduct. ACAS calls this payment in lieu of accrued but untaken holiday.
There are three steps. First, work out how much leave the employee has accrued by their leaving date. Accrual is based on calendar days in the leave year, not days actually worked, which is the method the GOV.UK holiday entitlement calculator uses:
Second, add any leave carried over from the previous year and subtract the days the employee has already taken this leave year. A positive figure is owed to the employee; a negative figure means they have taken more than they accrued.
Third, convert days into money. For a worker with fixed pay, a day's pay is a week's pay divided by working days per week, and a week's pay is usually annual salary divided by 52:
Worked examples
Click any example to load it into the calculator.
Common situations
Limits of this calculator
- Variable-pay week's pay isn't auto-calculated. For workers with overtime, commission or irregular hours, work out the 52-week average separately and use the daily rate tab.
- Notice pay, PILON of notice, redundancy pay are separate calculations not covered here.
- Tax and NI are not deducted. The figure is gross; PAYE applies in the normal way.
- Term-time-only and annualised-hours contracts can need bespoke methodology following Harpur Trust v Brazel.
- Irregular-hours and part-year workers (leave years from 1 April 2024) accrue at 12.07% of hours worked, a different method.
Frequently asked questions
How do I calculate holiday pay for an employee who is leaving?
Work out how much leave they accrued up to their leaving date: annual allowance multiplied by the proportion of the leave year worked (measured in calendar days). Add any carried-over leave, then subtract the days they have already taken. Multiply the remaining days by a day's pay. That cash figure goes into their final pay as payment in lieu of untaken holiday.
Is unused holiday always paid when someone leaves?
Yes. Under the Working Time Regulations 1998, an employer must pay in lieu for any accrued but untaken statutory holiday when employment ends. This applies even if the employee is dismissed for gross misconduct. Contractual holiday above the statutory 5.6 weeks is only paid out if the contract says so.
What if the employee has taken more holiday than they accrued?
If someone has taken more leave than they built up by their leaving date, the employer can only deduct the overtaken amount from final pay if there is a clear written agreement in the contract or staff handbook (a 'payback clause'). Without that written agreement, the employer cannot claw the money back.
How is a day's holiday pay calculated for a leaver?
For a worker with fixed pay, a day's pay is a week's pay divided by the number of working days per week. A week's pay is usually the annual salary divided by 52. For workers with variable pay (overtime, commission, irregular hours), a week's pay is the average over the previous 52 paid weeks instead.
Does holiday accrue based on days worked or calendar days?
For the leaver calculation, accrual is based on calendar days in the leave year, not days actually worked. The proportion is days from the leave year start to the leaving date, divided by the total days in the leave year. This is the method the GOV.UK calculator and ACAS guidance use.
What is the leave year and why does it matter?
The leave year is the 12-month period over which holiday entitlement is measured. An employer can set it (for example 1 April to 31 March). If none is set, it runs from the employee's start date. The proportion of the leave year worked drives how much holiday has accrued by the leaving date, so the correct start date matters.
Is leaver holiday pay taxed?
Yes. Payment in lieu of accrued holiday is treated as normal earnings and is subject to income tax and National Insurance through PAYE in the usual way. This calculator shows the gross figure before tax and NI are deducted.
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Sources
| Source | What it covers |
|---|---|
| GOV.UK · Taking holiday before leaving a job | The legal duty to pay untaken statutory leave on termination, and overtaken-leave deduction rules |
| ACAS · How holidays affect final pay | Payment in lieu of accrued holiday and the written-agreement rule for deductions |
| ACAS · Checking holiday entitlement | Accrual worked example (the "Jo, 26 weeks, 14 days" calculation) and first-year rounding |
| Working Time Regulations 1998, reg 14 | Compensation for accrued but untaken leave on termination |
| GOV.UK · Calculate holiday entitlement | The official calendar-day proportion method this tool mirrors |