Holiday entitlement is one of those topics that feels simple until you actually have to calculate it. Most people know workers get paid time off, but the moment you have part-time staff, irregular hours, or a bank holiday falling mid-contract, the questions start. Getting it right matters: holiday is a legal right, and mistakes can lead to claims and unhappy staff.
This guide walks through how holiday entitlement and holiday pay work for UK employers in plain English, so you can set up something fair and defensible.
This article is general information only and is not legal advice. Employment rules can change, so always confirm the details that apply to you on GOV.UK or speak to a qualified employment adviser.
The statutory minimum holiday
Almost all workers in the UK are entitled to a statutory minimum amount of paid holiday each year. The figure most people quote is 5.6 weeks for someone working a full week, but you should treat that as a starting point and confirm the current position on GOV.UK, because the rules and any caps can change.
The key idea is that entitlement is measured in weeks, not a fixed number of days. This matters because a "week" means something different for a five-day worker than for a three-day worker. Converting weeks into days or hours is where most of the practical work happens.
You can always offer more than the statutory minimum as a contractual benefit, and many employers do. What you cannot do is offer less. If your contract is silent or unclear, the statutory floor still applies.
Part-time and irregular-hours workers
Part-time workers are entitled to the same amount of holiday as full-timers, just scaled to the hours they work. The principle is proportionality: someone working half the hours gets half the holiday, expressed in their own working pattern.
The trickier group is workers with irregular or unpredictable hours — casual staff, zero-hours workers, term-time-only staff and similar. Because their working time varies, you cannot simply hand them a fixed number of days at the start of the year. Entitlement for these workers is usually built up based on the hours they actually work, and the method for calculating it has been the subject of changing rules, so this is an area to check carefully on GOV.UK.
If you employ a mix of regular and irregular staff, it is worth writing your approach down clearly so everyone understands how their holiday is worked out. Clear documentation also protects you if a dispute arises. Our guide on what to include in employment contracts covers how to set this out properly from day one.
How holiday pay is calculated
Holiday is paid time off, so the question is: paid at what rate? For a worker on fixed hours and fixed pay, it is straightforward — they receive their normal pay for the time they are on holiday.
It gets more involved when pay varies. Holiday pay is generally meant to reflect a worker's normal earnings, not just their basic salary. That means certain regular extras may need to be included, such as:
- Regular overtime that the worker normally works
- Commission that forms a regular part of their earnings
- Certain allowances and payments linked to the work they do
Where pay varies, holiday pay is often calculated using an average of earnings over a reference period. The length of that reference period is set by the rules and has changed over time, so confirm the current approach on GOV.UK. The underlying aim is fairness: a worker should not be financially worse off for taking the holiday they are entitled to.
Whatever you pay your staff, make sure it meets wage floors too. Holiday pay interacts with pay rates generally, and our overview of the National Minimum and Living Wage explains the rates you need to keep an eye on.
Accrual: how holiday builds up
Holiday does not all arrive on the first day of employment. It builds up, or "accrues", over the leave year. A common approach, especially in someone's first year, is for entitlement to accrue month by month as they work.
Here is a simple way to picture how to manage accrual in practice.
- Decide on your leave year — a fixed date for everyone, or each worker's start date.
- Work out the worker's full annual entitlement based on their hours.
- Track how much they have built up and how much they have taken.
- Review the balance before approving long periods of leave, especially early in employment.
- At the end of employment, settle any untaken accrued holiday, or recover holiday taken but not yet accrued where your contract allows.
Good record-keeping here saves arguments later. A simple holiday tracker that shows entitlement, accrued, taken and remaining is usually enough for a small employer.
Carrying leave over
Whether workers can carry unused holiday into the next year depends on the type of leave and the circumstances. As a general rule, the core statutory holiday is meant to be taken within the leave year, which encourages people to actually rest.
There are situations where carrying over is allowed or even required — for example where a worker could not take their leave for certain reasons such as sickness or family leave. The rules here are detailed and have shifted in recent years, so check the current position on GOV.UK before you refuse or agree to a carry-over.
It is sensible to have a written policy on carry-over so staff know where they stand. If you allow some flexibility, set a limit and a deadline so balances do not build up indefinitely. Holiday is also worth coordinating with other leave types — our guide to statutory sick pay and leave for small employers explains how sickness can interact with holiday.
Holiday is a right, not a perk — the safest approach is to track it carefully and pay people their normal earnings while they rest.
Bank holidays: extra or included?
This is one of the most common points of confusion. There is no automatic legal right to take bank holidays off, and bank holidays are not automatically on top of your statutory holiday entitlement. What happens depends entirely on the contract.
Many employers count bank holidays as part of the statutory entitlement; others give them in addition as a contractual benefit. Both are allowed, but you must be clear in writing which approach you use, because it changes how much usable holiday a worker actually has.
For part-time staff, bank holidays raise a fairness question, since these days fall on particular weekdays that a part-timer may not normally work. A common solution is to give part-timers a pro-rata allowance for bank holidays so they are treated proportionately. Whatever you choose, write it down clearly and apply it consistently.
Frequently asked questions
Can I pay a worker instead of giving them their holiday?
Generally no — the core statutory holiday is meant to be taken as time off, not paid out, while someone is still employed. "Rolled-up" holiday pay, where holiday pay is spread across normal wages, has a complicated legal history, so check the current rules on GOV.UK. Paying out untaken accrued holiday is normally only appropriate when employment ends.
How do I work out holiday for someone who works odd hours each week?
For irregular-hours workers, entitlement is usually built up in proportion to the hours actually worked rather than fixed in advance. The exact method has changed over time, so confirm the current approach on GOV.UK and write your chosen method into the worker's terms so it is transparent.
Do bank holidays have to be paid days off?
Not automatically. Whether a worker can take a bank holiday off, and whether it counts towards or on top of their entitlement, depends on what their contract says. The important thing is to state your approach clearly in writing so there is no confusion later.
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