Holiday Pay Explained

Under the Working Time Regulations 1998, almost all UK workers are entitled to a minimum of 5.6 weeks of paid annual leave per year. For a full-time worker on a standard five-day week, this equates to 28 days. Your employer may offer more generous contractual holiday on top of this statutory minimum, but they cannot offer less.

Bank holidays are not automatically on top of your 5.6 weeks — your employer can choose to count them as part of your statutory entitlement. You must check your contract to understand whether bank holidays are included in or additional to your 28-day minimum.

If you work part-time, your entitlement is calculated pro-rata. For example, if you work three days a week, you are entitled to 3 ÷ 5 × 28 = 16.8 days. Agency workers, workers on zero-hours contracts, and casual workers also accrue holiday in proportion to the hours they work.

• Full-time (5 days/week): 28 days minimum
• Part-time (3 days/week): 16.8 days minimum
• Zero-hours workers: 12.07% of hours worked (accrued method)

A Supreme Court ruling in Flowers v East of England Ambulance Trust (2021) confirmed that holiday pay must reflect a worker's normal remuneration, not just their basic salary. This means that if you regularly work overtime, receive commission, or earn shift allowances, these payments must be factored into your holiday pay calculation.

For workers with regular hours and fixed pay, calculation is straightforward — you are paid your normal weekly wage for each week of holiday taken. For workers with variable pay or hours, employers must calculate the average remuneration over a 52-week reference period (ignoring any weeks where no pay was received, going back up to 104 weeks if necessary).

The following elements should normally be included in holiday pay:

• Basic salary or hourly rate
• Regular voluntary overtime (if worked consistently)
• Commission and piece-rate payments
• Shift premiums and unsocial hours allowances
• Standby and on-call allowances that are regularly paid

Note that purely ad-hoc or genuinely occasional overtime does not need to be included. If you are uncertain, Acas provides a free helpline and detailed guidance.

Your employer has the right to control when you take your holiday, provided they give you reasonable notice. By law, if your employer wants to refuse a holiday request, they must give you at least as much notice as the length of leave requested. For example, to refuse a one-week holiday request, they must tell you at least one week before the intended start date.

Similarly, your employer can require you to take holiday at specific times — for example, during a company shutdown over Christmas. They must give you twice as much notice as the period of leave. If they require you to take one week off, they must give you at least two weeks' notice.

Common reasons employers may legitimately manage holiday include:

• Peak business periods where cover cannot be maintained
• Contractual provisions specifying a holiday year or booking window
• Pre-agreed shutdown periods

However, your employer cannot refuse all holiday requests to the point where you are unable to take your statutory entitlement within the leave year. This would be unlawful.

As a general rule, you cannot carry over unused statutory holiday (up to 4 weeks of the 5.6-week entitlement) into the next leave year. If your employer's leave year runs January to December and you have untaken days remaining at the end of December, you usually lose them.

However, there are important exceptions where carry-over is permitted or required:

• Sickness: If you were too ill to take holiday during the leave year, you may carry forward up to 4 weeks for 18 months after the end of the leave year in which it accrued.
• Maternity, paternity or adoption leave: Holiday accrued during statutory family leave can be carried over if it could not be taken during that period.
• Employer prevents you taking leave: If your employer failed to inform you of your entitlement or facilitate its use, you may be entitled to carry forward leave for up to 18 months under the 2023 amendments to the Working Time Regulations.

The additional 1.6 weeks above the 4-week EU-derived entitlement can be carried over or paid in lieu if your contract expressly permits it.

If you believe your employer has not paid you correctly for annual leave, you have several options. Start by raising the matter informally with your manager or HR department, citing the Working Time Regulations 1998 and the relevant case law if applicable.

If informal resolution fails, you can raise a formal written grievance under your employer's grievance procedure. Keep copies of payslips, rota records, and any written communications as evidence.

If the grievance process does not resolve the matter, you can bring a claim to an Employment Tribunal for unlawful deduction from wages under the Employment Rights Act 1996. You must notify Acas and go through Early Conciliation before lodging a tribunal claim. Time limits are strict: you generally have three months less one day from the date of the last underpayment to start Early Conciliation.

Important: a series of underpayments may be treated as a series of deductions, potentially allowing you to claim for a longer period — but tribunal case law in this area is complex. Citizens Advice or an employment solicitor can help you assess your claim.