Work out holiday entitlement and pay
Rolled-up holiday pay and the 52-week average for irregular hours workers, per the statutory rules.
Every worker on a zero-hours contract in the UK is entitled to 5.6 weeks of paid holiday a year, the same statutory minimum as a full-time employee ([1]). Since 1 April 2024, employers have been able to build that entitlement up at 12.07% of the hours worked in each pay period and, for the first time in almost two decades, to pay it as rolled-up holiday pay itemised on the payslip ([2]).
Zero-hours holiday pay is one of the hardest calculations in UK payroll, because the worker's hours and pay change from one period to the next. The choice sits between two lawful methods, each with its own rules, and getting either wrong exposes the employer to an unlawful-deductions claim ([3]). A worker who receives only basic pay during leave, when they normally earn commission or overtime, can bring a claim for the shortfall.
This guide explains how holiday pay works for zero-hours and casual staff: what a zero-hours contract is, the two payment routes open to an employer, the 12.07% accrual, the rolled-up option, the 52-week averaging method and the pay elements that must be counted in.
Key takeaways
- Zero-hours workers are entitled to the full 5.6 weeks of statutory paid holiday, capped at 28 days.
- For leave years starting on or after 1 April 2024, holiday accrues at 12.07% of the hours worked each pay period.
- Rolled-up holiday pay is now lawful for zero-hours workers, provided it is itemised separately on the payslip.
- Where holiday is paid when taken, the rate is the average weekly pay over the previous 52 paid weeks.
- Unpaid weeks are skipped, and the employer looks back up to 104 weeks to find 52 paid weeks.
- Holiday pay must include regular overtime, results-based commission and status-linked allowances, not just basic pay.
Zero-hours workers are entitled to holiday pay
The first misconception to clear is the idea that a zero-hours contract removes holiday rights. It does not. Statutory paid leave attaches to worker status, and almost everyone on a zero-hours arrangement is a worker for these purposes.
What a zero-hours contract is
A zero-hours contract is one under which the employer is not obliged to provide any minimum working hours and the individual is not obliged to accept any work offered ([4]). It is common in hospitality, retail, care and events work, where demand fluctuates week to week. The label describes the hours commitment, not the employment rights that come with it.
Anyone on a zero-hours contract who is a worker is entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination, with no exceptions ([5]). The right to paid holiday is therefore not optional or discretionary; it is the same statutory floor that applies across the workforce ([6]).
The 5.6-week entitlement still applies
The statutory entitlement of 5.6 weeks a year applies to zero-hours workers in full, subject to the same 28-day cap that limits every worker's statutory leave ([7]). The difference is not the size of the entitlement but the way it is measured, because a zero-hours worker has no fixed weekly pattern to translate into a set number of days.
To handle that, the law treats most zero-hours staff as irregular hours workers, defined as those whose paid hours in each period are wholly or mostly variable under their contract ([8]). For these workers, entitlement builds up in proportion to the hours actually worked rather than being fixed in advance, which is what makes both the accrual and the pay calculation distinctive ([9]).
Two lawful ways to pay holiday to a zero-hours worker
Since the April 2024 reforms, an employer running a zero-hours payroll has two compliant routes. The first is rolled-up holiday pay, added to each payslip as the worker earns. The second is the traditional method of paying holiday at the point leave is taken, using a 52-week average to set the rate ([10]).
Both methods start from the same accrual: for leave years beginning on or after 1 April 2024, irregular hours and part-year workers accrue holiday at 12.07% of the hours worked in each pay period ([11]). The methods differ only in when and how the money reaches the worker. An employer must pick one approach and apply it consistently, and recording it correctly is part of any competent payroll process for SMEs.
Rolled-up holiday pay at 12.07%
Rolled-up holiday pay spreads holiday pay across the year by adding a supplement to normal pay in each period, so the worker receives no separate payment when they actually take leave ([12]). It was unlawful for many years and was restored for irregular hours and part-year workers only, from 1 April 2024.
Where 12.07% comes from
The 12.07% figure is the ratio of statutory holiday to working time. A worker gets 5.6 weeks of leave out of a 46.4-week working year, and 5.6 divided by 46.4 is 12.07% ([13]). Applied as a supplement, it adds the right proportion of holiday pay to every hour worked. On a payslip, a worker earning £500 of basic pay in a period would receive an additional £60.35 of rolled-up holiday pay, calculated as 12.07% of £500 ([14]). The table sets out a few worked examples.
| Basic pay in the period | Rolled-up holiday pay (12.07%) | Total paid |
|---|---|---|
| £300 | £36.21 | £336.21 |
| £500 | £60.35 | £560.35 |
| £750 | £90.53 | £840.53 |
| £1,000 | £120.70 | £1,120.70 |
The payslip and consent conditions
Rolled-up holiday pay must be clearly itemised as holiday pay on the payslip, shown separately from basic pay, so the worker can see the holiday element they are receiving ([15]). Burying it inside a single hourly rate does not satisfy the requirement and leaves the payment open to challenge. An employer moving an existing worker onto rolled-up pay should also tell them the pay arrangement is changing ([16]).
The method is limited to irregular hours and part-year workers, and it cannot be used for staff with fixed hours ([17]). It also cannot be used to discourage workers from actually taking their leave: a worker paid rolled-up holiday pay is still entitled to take time off, and the employer should encourage them to do so even though no further payment falls due at that point ([18]).
The 52-week reference period method
Where an employer chooses to pay holiday at the time it is taken rather than rolling it up, the rate is set by averaging the worker's pay over a defined look-back window. This is the method that applied to all variable-pay workers before the 2024 reforms and remains available now.
Which weeks count
Holiday pay for an irregular hours worker is based on average pay over the previous 52 weeks in which they were paid, regardless of when the leave year starts ([19]). The reference period must include only weeks for which the worker was actually paid, and any week with no pay is skipped ([20]). To make up the 52 paid weeks, the employer looks back further, up to a maximum of 104 weeks before the leave ([21]).
Where a worker has been employed for fewer than 52 weeks, the employer uses however many complete paid weeks are available instead ([22]). The table below shows how the reference period adapts to different histories.
| Worker's situation | Weeks used for the average |
|---|---|
| Employed over a year, paid most weeks | Most recent 52 paid weeks |
| Started 20 weeks ago | The 20 paid weeks available |
| Only 45 paid weeks in the last 104 | Those 45 paid weeks |
| 7 unpaid weeks in the last 59 | The 52 paid weeks, skipping the 7 unpaid |
A worked example
The official method is to add up the total pay across the paid weeks and divide by the number of weeks. For a zero-hours worker with 52 paid weeks in the reference period whose total pay across those weeks was £12,040, the average is £12,040 divided by 52, giving £231.34 as the pay for one week of holiday ([23]). That weekly figure is then applied to each week of leave the worker takes.
For monthly-paid variable workers, the calculation runs through hourly rates: monthly pay divided by hours worked gives an average hourly rate, which is then applied to the hours in each week of the reference period ([24]). Running this by hand across dozens of casual staff is error-prone, which is why accountants handling multiple clients tend to use a payroll bureau platform that applies the reference-period logic per worker.
What pay must be included
Holiday pay is not simply basic pay. For the four weeks of leave derived from retained EU law, holiday pay must reflect a worker's normal remuneration, meaning it must include the elements the worker would normally earn while working ([25]). Excluding those elements is the single most common way employers underpay holiday.
The elements that must be counted in include regular non-guaranteed overtime, voluntary overtime that is regular enough to count as normal pay, results-based commission and allowances linked to a worker's status, such as seniority or qualifications ([26]). The principle, drawn from a line of case law, is that any payment intrinsically linked to the performance of the worker's duties belongs in the calculation ([27]). For a zero-hours worker whose earnings are made up largely of variable elements, this is not a marginal adjustment; it can be the difference between a lawful and an unlawful payment ([28]).
Common mistakes with zero-hours holiday pay
Several errors recur across zero-hours payrolls, and each one carries a risk of a claim for unlawful deduction of wages. Knowing where the traps sit is the fastest way for a small employer to stay compliant.
The first is treating holiday pay as basic pay only, when for the four EU-derived weeks it must include regular overtime, commission and status allowances ([29]). The second is including unpaid weeks in the 52-week average, which drags the weekly figure down and underpays the worker; unpaid weeks must be skipped and the window extended up to 104 weeks ([30]). The third is applying the 12.07% figure as the pay rate for a week of leave under the averaging method, rather than as the accrual rate; where holiday is paid when taken, the amount owed is set by the 52-week average, not by 12.07% ([31]).
A fourth mistake is hiding rolled-up holiday pay inside a single hourly rate instead of showing it as a distinct payslip line, which breaches the transparency condition and leaves the payment vulnerable to challenge ([32]). Compliant small business payroll tools itemise the holiday element automatically, which removes the risk of an unclear payslip.
Carrying over untaken holiday
A zero-hours worker who cannot take all their leave in a year may be able to carry some of it over, depending on the circumstances ([33]). Where a worker is unable to take holiday because of sickness, or because of a family-related leave such as maternity, statutory carry-over rules can apply, and rolled-up pay does not remove the right to take the time off ([34]). The detail of how entitlement is built up from hours is covered in the guide to pro rata holiday.
Work out zero-hours holiday pay accurately
Rather than average 52 weeks of variable pay by hand, or apply the 12.07% supplement across a shifting payroll, an employer can size the figure with the Moonworkers holiday pay calculator, which applies the reference-period and rolled-up rules to any pattern of hours and pay.
A 12.07% uplift on total pay, added to every payslip instead of paying when leave is taken.
Annual entitlement: 5.6 weeks (12.07%) · change
Statutory minimum is 5.6 weeks. Enter more if the contract gives extra leave.
Rolled-up holiday pay
£0.00
Enter hours and hourly rate, then press Calculate.
Tired of maintaining pay data by hand?
Moonworkers tracks hours, accrual and holiday pay automatically for every casual worker, itemised on each payslip and reported to HMRC in real time.
Conclusion
Holiday pay for zero-hours workers rests on one principle, that a worker should be no worse off financially for taking leave, delivered through two lawful mechanisms. Rolled-up pay at 12.07% suits employers who want to settle holiday as it accrues, while the 52-week average suits those who pay leave when it is taken. In both cases the pay must reflect what the worker normally earns, including regular overtime and commission, not a stripped-back basic rate.
The direction of travel is towards automating this arithmetic inside the systems employers already use to schedule and pay casual staff. As workforce and rota platforms embed UK payroll compliance directly, the choice between rolled-up and averaged holiday pay becomes a configuration setting rather than a monthly manual calculation, and the risk of a costly underpayment falls away with it.
Frequently asked questions
Do zero-hours workers get holiday pay?
Yes. Anyone on a zero-hours contract who is a worker is entitled to the full 5.6 weeks of statutory paid holiday a year, the same as other staff ([35]). The entitlement is capped at 28 days and cannot be removed by the contract.
How is holiday pay calculated for a zero-hours worker?
Holiday accrues at 12.07% of the hours worked in each pay period for leave years starting on or after 1 April 2024 ([36]). It is then either paid as a rolled-up supplement on each payslip, or paid when leave is taken at the average weekly pay over the previous 52 paid weeks ([37]).
Is rolled-up holiday pay legal for zero-hours contracts?
Yes, for leave years beginning on or after 1 April 2024, rolled-up holiday pay is lawful for irregular hours and part-year workers ([38]). It must be shown as a separate, clearly itemised line for holiday pay on the payslip, and it cannot be used for workers with fixed hours.
Does holiday pay have to include overtime and commission?
For the four weeks of EU-derived leave, holiday pay must reflect normal remuneration, which includes regular overtime, results-based commission and status-linked allowances ([39]). Paying only basic pay to a worker who normally earns commission risks an unlawful-deductions claim.
