For leave years beginning on or after 1 April 2024, irregular hours and part year workers build up statutory holiday at 12.07% of the hours they actually work in each pay period, up to a maximum of 28 days a year. For the same workers, employers may now pay holiday pay as rolled up holiday pay: a 12.07% uplift paid with each wage payment and shown separately on the payslip. Rolled up holiday pay is still not allowed for regular hours workers.

Who counts as an irregular hours or part year worker?

The definitions are in regulation 15F of the Working Time Regulations 1998. A worker is an irregular hours worker for a leave year if the number of paid hours they will work in each pay period is, under their contract, wholly or mostly variable. Zero hours and casual contracts usually fall here. A worker is a part year worker if their contract requires them to work only part of the year, with periods of at least a week in which they are not required to work and are not paid. Term time contracts are the typical example. Sick leave and statutory leave are ignored when deciding whether someone is a part year worker.

Where a worker has more than one contract with the same employer, regulation 15F(2) looks at the contracts together. GOV.UK confirms the same rules cover agency workers who meet the definitions. Everyone else, including part time staff on fixed hours, stays on the ordinary 5.6 weeks entitlement, pro rated by days or hours worked.

How does the 12.07% accrual work?

Regulation 15B, inserted by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (SI 2023/1426), applies to leave years beginning on or after 1 April 2024. On the last day of each pay period the worker accrues annual leave equal to 12.07% of the hours worked in that period. The rules then work like this:

  • Accrual cannot exceed 28 days in a leave year (regulation 15B(4)).
  • Fractions are rounded: less than 30 minutes counts as zero and 30 minutes or more counts as a full hour (regulation 15B(5)).
  • Leave can be taken in instalments but cannot be replaced by a payment in lieu except when employment ends (regulation 15B(6)).
  • The leave year starts on the date in a relevant agreement or, if none, on the start date of employment and each anniversary.

GOV.UK’s example: a weekly paid worker who works 30 hours earns 30 x 12.07% = 3.621 hours, which rounds to 4 hours of leave they can take from the next pay period. The 12.07% figure is not arbitrary. The government’s consultation explained that it equals 5.6 weeks of leave divided by the 46.4 weeks a full time worker is at work in a year, expressed as a percentage.

Why did the method change?

In July 2022 the Supreme Court decided Harpur Trust v Brazel. It held that holiday for permanent part year workers should not be pro rated to the work they actually do, which left them with more holiday than part time workers doing the same total hours spread evenly across the year. The government consulted on a fix and introduced the 12.07% accrual method so that entitlement is directly proportionate to hours worked.

For leave years that began on or before 31 March 2024, GOV.UK says employers can use either a leave year or an accrual system for these workers, and the new accrual system only has to be used once the leave year renews. Any leave year that started on or after 1 April 2024 is on the new rules.

Does leave keep building up during sickness or maternity leave?

Yes. Regulation 15C deals with periods of sick leave or statutory leave such as maternity, paternity or shared parental leave. The employer takes the average weekly hours the worker worked in the 52 weeks before the leave started (or the shorter period of employment), ignoring weeks in which the worker was on sick or statutory leave but including weeks in which they did no work. It then applies 12.07% to that average and multiplies by the number of weeks in each pay period of absence. Pay during the absence itself follows the usual rules, such as Statutory Sick Pay or statutory maternity pay.

GOV.UK also sets out carry over rules. An irregular hours or part year worker who could not take leave because of sickness can carry over up to 28 days, compared with 20 days for regular hours workers. A worker can carry over their whole entitlement if they were not paid rolled up holiday pay they were entitled to, were not given a reasonable opportunity to take leave, or were not told they would lose it.

How much holiday pay is due when leave is taken?

Workers are entitled to a week’s pay for each week of statutory leave. For irregular hours and part year workers, GOV.UK says all leave must be paid at their normal rate of pay, using average pay over the previous 52 weeks and counting only weeks in which they were paid. If some weeks had no pay, the employer counts back further, up to a maximum of 104 weeks, to find 52 paid weeks. A worker with less than 52 weeks of pay is averaged over the full weeks they have worked.

Normal pay includes commission, regular overtime and payments for length of service or professional qualifications, but does not usually include bonuses.

When is rolled up holiday pay permitted?

Before 2024, adding an amount for holiday to the hourly rate was treated as unlawful because it could discourage workers from taking leave. Regulation 16A now allows it for leave accrued under regulation 15B, so only for irregular hours and part year workers, and only for leave years beginning on or after 1 April 2024. GOV.UK confirms that employers cannot use rolled up holiday pay for regular hours workers, whether full or part time. The conditions are:

  1. Holiday pay is paid as a 12.07% uplift on the worker’s remuneration for work done, and remuneration means everything that counts towards a week’s pay under regulation 16.
  2. It is paid at the same time as the pay for the work.
  3. The itemised payslip shows the amount of holiday pay for the period.
  4. During sick leave or statutory leave, the worker is paid the average holiday pay per pay period from the previous 52 weeks (or shorter period) for the leave that accrues during the absence.

Paying correctly under regulation 16A discharges the employer’s liability to pay for that leave when it is taken. The worker still accrues and takes leave; they have simply been paid for it in advance.

Illustration only. A worker on a zero hours contract works 40 hours in a week at £10 an hour plus £20 of regular overtime premium, so remuneration for the week is £420. Rolled up holiday pay is £420 x 12.07% = £50.69, shown as a separate line on the payslip, making gross pay £470.69. The worker also accrues 40 x 12.07% = 4.828 hours, which rounds to 5 hours of leave. When they take those hours they are not paid again, because the holiday pay was included as they worked.

How is holiday pay taxed and recorded?

Holiday pay, whether paid when leave is taken, rolled up or paid in lieu on leaving, is earnings. GOV.UK lists holiday pay among the items on which tax and National Insurance are paid, including where it forms part of a termination payment, so it never shares the £30,000 exemption that can apply to statutory redundancy pay. Rolled up holiday pay is paid with the wages, so it goes through PAYE in the same pay period.

From 6 April 2026 GOV.UK says employers must keep detailed records of annual leave and holiday pay for at least 6 years, such as the number of days taken and the holiday pay paid, and may be fined if they cannot show they keep them. Accrued but untaken leave must be paid in lieu when a worker leaves.

What mistakes do employers make?

  • Applying 12.07% to regular hours staff, or using rolled up holiday pay for them.
  • Calculating the uplift on basic pay only, when it must apply to everything in a week’s pay, including regular overtime and commission.
  • Burying holiday pay in the hourly rate instead of showing it separately on the payslip.
  • Stopping accrual during sickness or maternity leave, which regulation 15C prevents.
  • Using 12 weeks instead of 52 paid weeks when paying holiday that was not rolled up.
  • Letting accrual exceed 28 days in a leave year.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.