How Holiday Pay is Calculated
Clear explanation with practical examples for UK workers
How Holiday Pay Is Calculated in the UK
Holiday pay calculation in the UK follows a principle-based approach: workers should receive their "normal remuneration" during leave. For most employees on fixed salaries, this is simply their usual pay. But for workers with variable earnings — overtime, commission, shift allowances, or irregular hours — the calculation is more complex.
The reference period for calculating average earnings is 52 weeks (changed from 12 weeks in April 2020). This longer period provides a fairer average, particularly for seasonal workers whose earnings fluctuate throughout the year.
The 52-Week Reference Period
To calculate holiday pay using the reference period, take the last 52 weeks in which the worker earned pay (skip zero-pay weeks, look further back). Add up total earnings across those 52 weeks, divide by 52 to get average weekly pay, then divide by working days per week for a daily rate.
| Component | Include in Reg 13 (4 wks)? | Include in Reg 13A (1.6 wks)? |
|---|---|---|
| Basic salary | Yes | Yes |
| Regular overtime | Yes | No (unless contractual) |
| Commission | Yes | No (unless contractual) |
| Shift allowances | Yes | No (unless contractual) |
| Travel allowance | Usually no | No |
Special Cases in Holiday Pay
New starters: If employed fewer than 52 weeks, use all available working weeks. Maternity/sick leave: These weeks are excluded from the reference period; look further back. Term-time workers: Holiday is built into the term-time salary — see our term-time calculator.
For general salary calculations, use the pro rata calculator. For overtime-specific holiday pay, see the overtime holiday pay calculator. To check your basic UK holiday pay entitlement, use our reference guide.
Quick Summary: How Holiday Pay is Calculated
If you're short on time, here's what you need to know about how holiday pay is calculated:
- What it means: How Holiday Pay is Calculated involves calculating pay or entitlement proportionally based on the ratio of hours or time worked versus the full-time equivalent.
- The formula: Full-Time Amount × (Your Hours ÷ Full-Time Hours) = Your Pro Rata Amount
- Who needs it: Part-time workers, term-time staff, teachers, job-sharers, and anyone on reduced hours.
- UK law: Under the Part-time Workers Regulations 2000, part-time employees have the right to be treated no less favourably than comparable full-time workers.
Worked Example: How Holiday Pay is Calculated
Let's calculate holiday pay for a part-time employee. Maria works 20 hours per week (full-time is 37.5 hours) at £12.50 per hour.
Step 1 — Holiday entitlement: 5.6 weeks × (20 ÷ 37.5) = 2.987 weeks = 14.93 days
Step 2 — Daily holiday pay rate: 20 hours ÷ 5 days = 4 hours × £12.50 = £50/day
Step 3 — Total annual holiday pay: 14.93 days × £50 = £746.67
Under UK employment law, Maria is entitled to a minimum of 5.6 weeks' paid holiday, calculated pro rata based on her part-time hours. This how holiday pay is calculated follows the method set out in the ACAS holiday pay guidance.
Key UK Holiday Pay Rules
- Statutory minimum: All UK workers are entitled to 5.6 weeks' paid holiday (28 days for full-time, pro rata for part-time).
- Bank holidays: There's no automatic right to paid bank holidays — employers can include them in the 28-day total or add them on top.
- Irregular hours: From April 2024, the new accrual method for irregular hours workers calculates entitlement at 12.07% of hours worked in each pay period.
- Rolled-up holiday pay: Now permitted for irregular hours and part-year workers (from April 2024), allowing holiday pay to be included in each payslip.
- Carry-over: Workers must take at least 4 weeks' holiday per year. Additional entitlement (1.6 weeks) can sometimes be carried over if your contract allows.
Source: ACAS Holiday Entitlement Guide
All calculations on this page follow ACAS pro rata pay guidelines and are consistent with the UK Employment Rights Act 1996. Tax figures use HMRC 2025/26 rates. The April 2025 National Living Wage of £12.21/hour is applied where relevant.
Further Reading
For more help with how holiday pay is calculated, explore our free UK tools. You may also find these useful: pro rata calculator, term-time salary calculator, overtime calculator.
Last updated: February 2026. Verified against HMRC 2025/26 tax rates and April 2025 National Living Wage (£12.21/hour).
Frequently Asked Questions
UK workers are entitled to a minimum of 5.6 weeks paid holiday per year (28 days for full-time workers). This can include bank holidays. Part-time workers receive a proportional amount.
Part-time holiday = 5.6 × number of days worked per week. For example: 3 days/week × 5.6 = 16.8 days annual holiday.
The 12.07% calculation is used for casual/irregular workers. It represents 5.6 weeks ÷ 46.4 working weeks = 12.07%. This percentage is added to pay or accrued as holiday entitlement.
Employers CAN include bank holidays within the 5.6 weeks statutory entitlement. There is no automatic right to bank holidays off in addition to the 28 days, unless your contract states otherwise.