How to Calculate Holiday Pay (UK)
The right calculation depends on how the worker is paid. Four patterns cover almost every case.
Holiday pay due
£615.40
Daily rate: £123.08 · Weekly rate: £615.38
Annual salary £32000 ÷ 260 paid days = £123.08 per day. 5 days of holiday × £123.08 = £615.4.
Step 1 — identify the pay structure
The first decision is which of these four buckets the worker falls into:
- Fixed salary. Same monthly amount, no variable elements.
- Fixed hourly. Hourly rate, same hours each week.
- Variable pay. Hours or pay vary week to week. Use the 52-week reference period.
- Rolled-up. Irregular or part-year worker on the 12.07% uplift system.
Step 2 — apply the right formula
Fixed salary
Day rate = annual salary ÷ 260 paid days. Holiday pay = day rate × days of holiday. Or simply continue paying the normal monthly salary.
Fixed hourly
Holiday pay = hourly rate × hours of holiday. The rate must include any regular elements (shift premiums, regular overtime) that form part of normal pay.
Variable pay
Take the average weekly pay over the last 52 paid weeks (skipping zero-pay weeks, looking back up to 104 weeks). Multiply by the number of weeks of holiday — or divide by typical days/week for a daily rate.
Rolled-up (12.07%)
Each payslip adds 12.07% to the basic pay, itemised separately. No further payment is needed when the worker takes time off.
Step 3 — include the right elements of pay
Holiday pay must reflect “normal remuneration” — what the worker would have earned at work. Include basic pay, regular overtime (both compulsory and voluntary), commission tied to performance, regular bonuses, travel time, and on-call payments. Exclude one-off discretionary bonuses and expense reimbursements.
Frequently asked questions
What's the 52-week reference period?+
When a worker has variable pay (overtime, commission, variable hours), holiday pay is based on the average pay over the previous 52 weeks of paid work. Weeks with no work or no pay are skipped, looking back up to 104 weeks to find 52 paid weeks.
What pay must be included in holiday pay?+
Basic pay, regular overtime (both compulsory and voluntary), commission tied to performance, regular bonuses, travel time payments, and on-call/standby payments. Discretionary one-off bonuses and expense reimbursements are excluded.
Is it lawful to pay holiday pay at basic rate when overtime is regular?+
Not for the four weeks of leave guaranteed by EU-derived law (now retained in UK law). Workers must receive their normal remuneration including regular overtime and commission for at least the four-week portion of the 5.6 weeks. Most employers apply the same rule to the full 5.6 weeks for simplicity.