UK Holiday Pay Explained - Your Complete Guide
Understand how holiday pay is calculated in the UK, including rules for variable pay, commission, overtime, and the 52-week reference period.
How Holiday Pay Works
When you take annual leave in the UK, you should receive your normal pay. For workers with variable pay (commission, overtime, bonuses), holiday pay must reflect what you would have earned if working.
Calculating Holiday Pay
For fixed-hours workers, holiday pay is your normal weekly pay. For variable hours/pay, it's calculated using a 52-week reference period (excluding weeks where no pay was earned), averaging your earnings to determine holiday pay.
What's Included
Holiday pay should include: basic pay, regular overtime (if guaranteed or regularly worked), commission payments, and other payments intrinsically linked to your role. It excludes: expenses, irregular overtime, and discretionary bonuses.
Rolled-Up Holiday Pay
Rolled-up holiday pay (adding a percentage to regular pay instead of paying when leave is taken) is legally risky for employers. Workers paid this way can claim additional pay when taking leave.