leave-and-absence
Holiday entitlement and holiday pay: an employer guide
A practical guide to recording annual leave, calculating entitlement and handling holiday pay for UK workers.
Most UK workers are entitled to 5.6 weeks of paid holiday each leave year. For a worker on five days a week, this is usually 28 days. Bank holidays can be included within that total if the terms say so.
Record the practical rules
The contract or handbook should explain the leave year, annual entitlement, treatment of bank holidays, request process, notice requirements, carry-over rules and what happens on joining or leaving part-way through a year. Make sure managers apply the same rules consistently.
Part-time workers receive a proportionate entitlement. Irregular-hours and part-year workers may be subject to specific accrual and holiday-pay rules, including rules that depend on when the leave year began. Use the current official calculator rather than relying on a fixed spreadsheet indefinitely.
Calculate entitlement from the working pattern
For a regular five-day worker, 5.6 weeks usually produces 28 days. A regular three-day worker would normally receive 16.8 days. Employers can express entitlement in days or hours where that accurately reflects the pattern, but should use one consistent method and explain rounding.
Joiners and leavers usually receive a proportion of the leave-year entitlement. Check the contractual leave year and the date employment starts or ends. Where enhanced contractual holiday exceeds the statutory minimum, the contract can explain how the additional portion is treated, provided statutory rights are preserved.
Irregular-hours and part-year calculations require particular care. The applicable rules can depend on the leave year and worker category. Use current GOV.UK guidance and retain the calculation rather than assuming that a historic percentage or old payroll setting remains correct.
Holiday pay
Holiday pay is intended to reflect the pay a worker normally receives. The calculation can differ according to working pattern and the type of holiday being taken. Regular overtime, commission and certain other payments may need to be considered for part of statutory leave.
The statutory framework distinguishes between portions of leave for some holiday-pay purposes. Employers should not assume that basic salary alone is always sufficient. Identify regular payments intrinsically linked to the work and use the correct reference period for workers without normal working hours.
Document the data used, reference period and result. Payroll and HR should agree who reviews exceptions such as long absence, recent changes in hours or insufficient pay history.
Employer checklist
- Verify the worker's working pattern and leave-year dates.
- Calculate joiner and leaver entitlement accurately.
- Keep reliable records of leave taken and remaining.
- Check carry-over where sickness or family leave affects the ability to take holiday.
- Review payroll treatment when normal pay includes variable elements.
Managing holiday requests fairly
Set a clear request route and response time. Employers can control when leave is taken, subject to contractual and statutory rules, but decisions should be reasonable and consistent. If too many people request the same period, use transparent operational criteria rather than informal favouritism.
Encourage leave throughout the year and monitor large unused balances. A rule preventing all carry-over will not be appropriate in every situation. Special provisions can apply where statutory leave could not be taken because of family leave, sickness or because the employer did not give the worker a reasonable opportunity and warning to take it.
Sickness, family leave and holiday
Holiday continues to accrue during statutory family leave and can accrue during sickness absence. A worker who becomes ill during holiday may be able to treat the period as sickness if the relevant requirements are met. Coordinate the absence and holiday policies so employees know whom to notify and what evidence is required.
Do not require somebody on maternity or another statutory family leave to use holiday during that leave. Plan how accrued entitlement will be taken before or after the statutory leave and record the agreement.
When employment ends
Calculate accrued but untaken statutory holiday up to the termination date and include the appropriate payment in final pay. A deduction for overtaken holiday needs a valid contractual or other legal basis. Provide a calculation the employee can understand, especially where hours or pay varied.
Common mistakes
- Giving every part-time worker the same number of days without considering their working days.
- Adding bank holidays on top of 5.6 weeks when the contract says they are included, or doing the reverse.
- Using basic pay for all leave despite regular variable earnings.
- Letting operational pressure prevent workers from taking statutory leave.
- Applying an outdated irregular-hours formula.
- Failing to reconcile unused leave when employment ends.
For the headline entitlement, see our holiday entitlement FAQ. Our employee handbook guide explains where the leave-request process can sit.
This guide is general information, not legal advice. Holiday calculations can be fact-specific, especially for irregular hours, variable pay and historic leave. Check the current rules or take professional advice where needed.