How is rolled-up holiday pay calculated for irregular-hours workers?

Full answer

Following legal reforms clarifying holiday pay for irregular-hours and part-year workers, rolled-up holiday pay became a lawful, specifically defined method (previously legally uncertain) for calculating and paying holiday entitlement for workers whose hours vary significantly from week to week. **Who this method applies to** Rolled-up holiday pay is specifically permitted for 'irregular hours workers' (whose paid hours are wholly or mostly variable in each pay period under the terms of their contract) and 'part-year workers' (who are contracted to work only part of the year and have periods within it of at least a week where they are not required to work and are not paid). It is not generally available for workers with regular, fixed hours, who should instead receive holiday pay in the normal way when they actually take leave. **The 12.07% calculation** The 12.07% figure reflects the proportion that 5.6 weeks of statutory annual leave represents of the remaining 46.4 working weeks in a year (5.6 / 46.4 = 12.07%). Rolled-up holiday pay is calculated as 12.07% of the worker's total pay for actual hours worked in each pay period, and must be paid at the same time as the wages for that period -- it cannot be paid as a single lump sum at the end of the year or deferred to when leave is actually taken. **Must be separately itemised** A critical compliance requirement is that rolled-up holiday pay must be shown as a clearly identified, separate amount on the worker's payslip, distinct from their basic pay for hours worked -- simply building it invisibly into an inflated hourly rate without separate identification does not meet the legal requirement and risks a claim for unpaid holiday pay. **Worked example** A zero-hours care worker earns £1,500 in a particular month for hours actually worked. Her rolled-up holiday pay for that month is calculated as 12.07% x £1,500 = £181.05, paid alongside her normal wages for the same period and shown as a distinct line on her payslip (e.g. 'Holiday pay: £181.05'), rather than being held back until she actually books a week off. Over a full year of varying pay, her total rolled-up holiday pay accumulates to approximately 12.07% of her total annual earnings for hours worked, broadly equivalent to what 5.6 weeks of holiday pay would represent if calculated using the standard average-earnings method instead. **Does rolled-up holiday pay mean workers cannot take time off?** No -- workers receiving rolled-up holiday pay still retain their full statutory right to actually take 5.6 weeks of annual leave (unpaid, since the pay has already been rolled into their regular wages), and employers must still allow and not discourage workers from taking that time off, since the right to rest and recovery is separate from, and not satisfied merely by, receiving the corresponding pay. **Why this reform mattered** Before this method was formally clarified in legislation, rolled-up holiday pay had actually been ruled unlawful by case law for some years (on the basis that it could discourage workers from taking actual leave, since the money had already been received), creating significant uncertainty for employers of irregular-hours staff -- the current rules resolve this by permitting rolled-up holiday pay specifically for irregular-hours and part-year workers, provided it follows the precise 12.07% calculation and separate itemisation requirements described above.

Try the calculator

More answers

• What rights do zero-hours contract workers have in 2026?