Holiday Pay for Irregular Hours & Part-Year Workers (UK)

Holiday pay becomes tricky when someone doesn’t work the same hours every week, works only part of the year, or has variable pay. To make this easier (and more consistent), UK guidance now supports a clearer approach for irregular-hours and part-year workers: holiday entitlement accrues as a percentage of hours worked, and employers may choose to use rolled-up holiday pay for these worker types.

This article explains:

Who counts as irregular hours or part-year
How statutory holiday entitlement works in practice
How 12.07% accrual is calculated (with examples)
How holiday pay is paid using either:
- the 52-week reference period, or
- rolled-up holiday pay
Common mistakes that lead to disputes or backpay claims

1) Who is this article for? (Irregular-hours and part-year workers)

Irregular-hours workers

These are workers whose paid hours vary from pay period to pay period (for example, zero-hours contracts, casual staff, shift workers with changing rotas). Under the updated approach, their holiday entitlement typically builds up based on the hours they actually work each pay period.

Part-year workers

These are workers who are contracted for the year but only work part of it, with stretches of time where they are not working (and not paid) for that employer. Typical examples: term-time patterns, seasonal work, or “on/off” working arrangements. The accrual approach also applies to this group.

2) The baseline rule: statutory holiday entitlement in the UK

The UK statutory minimum holiday entitlement is 5.6 weeks of paid annual leave (often described as “28 days” for someone working 5 days per week).

For irregular-hours and part-year workers, it’s usually more practical to think in hours rather than “days” or “weeks” because their working patterns don’t fit a standard week. That’s where the percentage accrual method comes in.

3) The 12.07% accrual method (the simplest way to track entitlement)

What does 12.07% mean?

For irregular-hours and part-year workers, holiday entitlement can accrue at 12.07% of hours worked per pay period, typically calculated on the last day of each pay period. The 12.07% figure is based on the statutory entitlement of 5.6 weeks.

Important: if you offer more than statutory leave

If a worker’s contract gives them more than the statutory minimum, you will need to adjust the percentage upward so it reflects the higher entitlement.

How it’s applied (in plain terms)

Each pay period:

total the hours the worker actually worked in that pay period
multiply by 12.07%
add that to the worker’s “holiday hours bank”

When they take time off later, you deduct the holiday hours they used.

4) Worked examples (12.07% accrual)

Example A — Weekly pay, variable hours

Pay period: weekly
Hours worked this week: 20 hours

Holiday entitlement accrued this week:
20 × 12.07% = 20 × 0.1207 = 2.414 hours

So the worker “earns” about 2.41 hours of paid holiday for that week (your payroll/HR system should apply a consistent rounding policy).

Example B — Monthly pay, fluctuating hours

Pay period: monthly
Hours worked in the month: 86 hours

Holiday entitlement accrued:
86 × 0.1207 = 10.3802 hours (≈ 10.38 hours)

If the worker later books a day off that would normally have been an 8-hour day, you’d deduct 8 hours from their holiday bank, leaving about 2.38 hours remaining. Acas+1

5) Paying holiday: two compliant approaches you can choose from

Option 1 — Pay holiday when it’s taken (52-week reference method)

If you pay holiday at the time it’s taken, the pay calculation typically uses a reference period approach so workers with variable pay get a fair “average” holiday pay. ACAS continues to describe using a 52-week reference period to calculate holiday pay for variable pay patterns.

This approach is best when:

you want holiday to be paid during the leave period
you prefer traditional payroll handling (holiday pay appears when leave is taken)
you have enough pay history to average

Practical tip: keep a clean record of hours worked and pay received, because holiday pay accuracy depends on it.

Option 2 — Rolled-up holiday pay (only for irregular-hours & part-year workers)

Rolled-up holiday pay means you add a separate extra amount to each payslip to cover holiday pay, instead of paying holiday pay when the worker takes leave. Employers do not have to use rolled-up holiday pay—but they can choose to for these worker types.

How rolled-up holiday pay is typically calculated

A common way is to pay an additional 12.07% of a worker’s pay each pay period as “holiday pay” (shown separately on the payslip).

Critical point many employers miss:

Even if you pay rolled-up holiday pay, you still must:

make sure workers can take their holiday entitlement, and
encourage them to take it (holiday is a health and safety protection, not just money).

6) Rolled-up holiday pay: an example you can copy into your payroll notes

Assume:

Pay period: monthly
Hourly rate: £15
Hours worked: 80
Base pay: 80 × £15 = £1,200

Rolled-up holiday pay for that month:
£1,200 × 12.07% = £144.84

So the payslip might show:

Basic pay: £1,200
Rolled-up holiday pay: £144.84
Total gross (before deductions): £1,344.84

When the worker takes holiday later, they still take the time off, but you do not pay additional holiday pay at that time because it has already been paid gradually.

7) How to implement rolled-up holiday pay properly (practical checklist)

If you decide to use rolled-up holiday pay, implement it like a system—not a quick payroll hack.

Implementation checklist

Confirm eligibility
Use rolled-up holiday pay only for irregular-hours and part-year workers.
Decide your policy: accrual tracking + leave booking
Rolled-up affects how pay is delivered, not the worker’s actual entitlement. You still need a process for:
- accruing leave (often 12.07% of hours worked), and
- booking leave and deducting leave hours.
Update contracts / written terms
Spell out clearly that holiday pay is included as a separate line item each pay period, and how the holiday year and leave requests work. (This helps prevent “I didn’t know” disputes.)
Make payslips explicit
Holiday pay should be clearly identifiable on the payslip (not bundled silently into hourly rate).
Proactively encourage leave
A common risk is workers never taking time off because “they’re already paid.” Your policy should actively prompt and track leave usage.

8) Common mistakes (that cause backpay disputes)

Mistake 1: Using rolled-up holiday pay for fixed-hours staff

Rolled-up holiday pay is intended for irregular-hours and part-year patterns (don’t apply it universally).

Mistake 2: Not showing holiday pay separately on payslips

If workers can’t clearly see what they’re being paid for holiday, it creates confusion and disputes later.

Mistake 3: Paying rolled-up holiday pay but not letting people take leave

You still have a responsibility to ensure workers can take their holiday and encourage them to take it.

Mistake 4: Forgetting to adjust the % for enhanced entitlement

If you give more than 5.6 weeks, the 12.07% needs to be adjusted—otherwise you under-accrue.

Mistake 5: No clear “holiday year” or record keeping

Without consistent records, you can’t defend your calculations or show compliance if challenged.

9) Quick FAQ (SEO-friendly)

Can I use rolled-up holiday pay for everyone?

Rolled-up holiday pay is generally positioned for irregular-hours and part-year workers, not typical fixed-hours employees.

Do I still have to track holiday if I use rolled-up holiday pay?

Yes. Rolled-up changes when holiday pay is paid, not the worker’s right to time off. Employers still need to ensure workers can take leave and should encourage it.

Do I have to use rolled-up holiday pay?

No—employers can continue to calculate holiday pay using the standard approach (including the 52-week reference method) and pay holiday when it is taken

Holiday Pay for Irregular Hours & Part-Year Workers (UK): Accrual, 52-Week Average & Rolled-Up Holiday Pay