Zero-Hours Contract Holiday Pay: The 12.07% Calculation Method Explained (2026/27)

5.6 weeks of statutory annual leave divided by the 46.4 working weeks remaining in a year (52 weeks minus 5.6 weeks of leave) equals approximately 12.07%. This percentage, applied to hours worked, gives an equivalent amount of paid holiday accrual for irregular-hours and zero-hours workers.

Yes, for irregular-hours and part-year workers specifically, following legislative changes effective from April 2024, which formally permit rolled-up holiday pay calculated at 12.07% of pay for hours worked, paid alongside normal wages, for holiday years starting on or after 1 April 2024. This reversed a period of legal uncertainty following earlier case law that had cast doubt on rolled-up holiday pay.

It means holiday pay is added to each payslip as it is earned (at 12.07% of the pay for hours worked in that pay period) rather than being paid only when the worker actually takes time off. The worker still needs to take actual time off work, but is paid for it throughout the year rather than in a separate lump sum at the time of the holiday.

No. It specifically applies to irregular-hours workers and part-year workers, as defined in the Working Time Regulations following the 2024 reforms. Workers with fixed, regular hours continue to accrue and be paid holiday under the normal reference-period method, not the 12.07% method.

Broadly, a worker whose number of paid hours in each pay period during the term of their contract is wholly or mostly variable, which typically includes most zero-hours contract workers and many casual or bank staff.

If a zero-hours worker earns £500 in a pay period for hours actually worked, their rolled-up holiday pay for that period would be 12.07% × £500 = £60.35, paid on top of the £500, giving a total gross payment of £560.35 for that period.

Yes. Holiday pay, whether paid as a lump sum for time taken off or rolled up into each payslip, counts as normal taxable earnings for income tax, National Insurance and pension auto-enrolment purposes, exactly like any other wage payment.

No, once a worker is correctly classified as an irregular-hours or part-year worker, the employer must apply the specific rules that now apply to that category consistently, rather than switching between methods arbitrarily, though which precise method is used (rolled-up versus traditional accrual paid at time of leave) can be a specific employer choice within the permitted framework for that worker type.

Holiday pay itself is not counted towards National Minimum Wage compliance for the hours actually worked — the underlying hourly rate for time worked must independently meet or exceed the minimum wage, with holiday pay treated as an additional payment on top rather than part of the wage calculation for minimum wage purposes.

Check whether holiday pay is shown as a separate, clearly identified line item (whether rolled up each period or paid at the time leave is taken), and verify it amounts to approximately 12.07% of pay for hours worked in that period if the employer uses the rolled-up method, flagging any discrepancy with the employer or ACAS if the figure looks incorrect.