Glossary · UK
What is Holiday Pay Accrual?
The way statutory paid holiday entitlement builds up over the course of a leave year, particularly for irregular-hours and part-year workers who accrue it as a percentage of hours actually worked.
Full Definition
Holiday pay accrual describes how statutory paid annual leave -- 5.6 weeks a year for a full-time worker under the Working Time Regulations 1998 -- builds up over a leave year, and how that leave is valued and paid. Most workers with regular hours accrue holiday evenly across the year and simply take agreed days off, paid at their normal rate of pay including regular overtime, commission and certain allowances rather than basic pay alone, following case law that clarified what should count as "normal remuneration" for holiday pay purposes. For irregular-hours and part-year workers, reforms effective from January 2024 introduced a statutory accrual method based on 12.07% of hours worked in a pay period (reflecting that 5.6 weeks is 12.07% of the 46.4 working weeks in a standard year), and reintroduced the option of rolled-up holiday pay -- an additional amount, again 12.07% of pay, added to each payslip instead of paying separately when leave is taken, provided it is itemised separately and does not discourage a worker from actually taking leave. Untaken statutory holiday can normally be carried over only in limited circumstances, such as sick leave, certain types of family leave, or where an employer failed to give the worker a reasonable opportunity to take it or did not tell them it would be lost.