A ruling on holiday pay made in April 2020 means that overtime should be used when calculating holiday pay. A new ruling on holiday pay made in April 2022 altered how part time worker’s entitlements are calculated.
Despite the new ruling on taking overtime into account made in 2020, many employers still miscalculate employees holiday entitlement.
The most important part of the ruling is that If you get paid overtime, your employer should calculate your holiday pay based on average earnings over the last 52 weeks.
The new 2022 rules have altered how holiday pay is calculated for part time workers to make sure they are treated fairly.
How is Holiday Pay Calculated in the UK?
Most UK workers are entitled to 5.6 weeks statutory holiday pay each year. Some employers may offer additional holidays as part of a work contract.
The calculation of pay varies depending on whether you’re on a fixed salary, or a shift worker. Regular commissions and bonus payments can also have a bearing on how holiday pay entitlement is worked out.
Regardless of shift patterns or hours, holiday pay should mean you get the same pay on holiday as at work.
Holiday Pay For Workers On Fixed Hours
If you are a worker on full or part time hours, holiday pay is calculated using your regular pay rate. If you work full time and are paid £450 a week, your holiday pay will be the same.
Some employers may offer you additional holidays for overtime hours worked, this is called time off in lieu.
Holiday Pay For Workers on Zero Hour Contracts
Some question whether workers on zero hour contracts have the right to holiday pay. The answer is that they have the same entitlement as any other worker.
To calculate weekly pay that should be given for holiday, the average of the last 52 weeks should be used. Not yet worked a full 52 weeks? It should be based on an average of the weeks you have worked to date.
Calcuating Holiday Pay – Overtime, Commission & Bonuses
If you regularly get overtime, commission and bonuses in your wages, this must be taken into consideration.
An employer must include this in the average pay calculation for at least 4 weeks of your annual holiday time.
New Ruling on Calculating Holiday Pay in 2022 – Part Time Workers
The most recent rule changes to how holiday pay is calculated were made in April 2022. These altered how holiday pay is calculated for part time workers.
Under the old rules, part time workers holiday pay was calculated using overtime worked during the previous 12 weeks. The new rules which applied mean that the calculation must be done based on the last 52 weeks.
Accounts and legal offers a detailed overview of the new ruling on overtime and holiday pay in 2022.
Help Calculating Holiday Pay
The following resources offer easy to understand advice and further reading on your holiday pay entitlement.
- ACAS has an easy to read overview of your rights to accurately calculated holiday pay for different types of working hours.
- Citizens Advice England & Wales has a good guide to your pay entitlements, and offers practical advice on what to do if your workplace has miscalculated your holiday wage.
Bear Scotland Ltd v Fulton – An Important Legal Case
On 4 November 2014, The Employment Appeal Tribunal decided the case of Bear Scotland Ltd (et al) v Fulton.
This case considered whether employers should take overtime payments into account when calculating statutory holiday pay.
The Tribunal ruled that additional payments such as voluntary overtime and payment for being on stand-by for emergency call outs should be taken into account when calculating statutory holiday pay.
Workers can make a back-dated claim for further holiday pay owed under the new calculation. However back-dated claims can only be made to The Employment Tribunal if it is less than 3 months since the last incorrect payment of holiday pay.
Good or Bad Judgement?
The Tribunal’s judgement in Bear Scotland Ltd (et al) v Fulton has been celebrated by Workers Unions who estimate that 1/6 of UK workers will benefit from this new calculation with increased holiday pay.
Business groups such as The Federation of Small Businesses, The British Chambers of Commerce and The Institute of Directors have however expressed concerns as this re-calculation could create an increase of around 3% to the payroll bill of the members. This in turn could lead to an increased “squeeze” on small businesses, just as the UK economy was starting to turn around. Ultimately if businesses are unable to pay employees, that could lead to redundancies.
My hours has been increased by 8hrs. With my former hours I was entitled to 16 days annual leave. Now I am entitled to 18. According to my calculations, they should be 22 days. Company gave me a calculation that had no sense or explanation. So they have just decided to calculate holidays differently from before, so I get less comparatively than my colleagues because they have increased my hours. Could they do that? Apply different holiday calculation?
I had to shield under gov guidelines and then my medication failed and exacerbated my disability, my boss now says my old hours and shift patterns are no longer available as they have had to change the way the surgery is run can they technically take my job away?
Does anyone knows the formula to calculate the overtime holiday?
alternate leave OR day in lieu, can employees take these days off whenever they like?
I am in a basic plus commission job, this month I got an extra payment for taking holiday to include my average daily commission. We were not aware of this and my question is am I able to claim for holiday taken previously as the company has not paid this and have not made their staff aware
My employer (an international company) had not implemented any form of enhanced holiday pay for shift/on call workers since I arrived in 2013. I lodged a request about this is 2014 and have been battling them ever since for updates about if and when they plan to introduce amendments to take account of it. I’ve been continously fobbed off by HR for the entire period with excuses such as software problems and time to integrate these into the systems but for the last year I’ve just been completely ignored. Is there a way I can force my employers hand? Can I take a case to tribunal or court? I’m not really sure what else I can do. I’ve even raised it at a senior management feedback forum but again received no formal response. To say I’m annoyed is an understatement. I suspect they’ve done nothing over this entire period and are just hoping I am going to fade away…. Any advice on how to push this forward appreciated.
Today I have been told by HR about how my holiday pay will be calculated going forward to take into account the overtime. They are only backdating to November 2018 and told me this is when the new legislation came into force. I am sure this new ruling applies back to 1996. I know for a fact the new legislation came into play around 2014 but that employees were able to claim back to 1996. Please advise how far back my employer should be paying me for. I have worked with them since April 2014, they took my previous firm over at that time but i have always worked overtime weekly.
Average is paid for all holludays during the year
Do you get your average wage at both your summer and christmas holiday or is it only worked out for one of the 2 weeks holiday you are off
I have an issue i cannot get answered, i work 4 on 4 off 12 hour shifts, days and nights, if i take a holliday im only paid 9.5 hours. They say they take last 12 weeks and devide it by 5 to give my average. But we dont work 5 days or even book 5 days, we book 4 days holliday. So why are we not getting a full days pay. Taking 4 days holliday i lose ten hours pay surely this has to be wrong
Hi i work on average 6 days a week and 7 out of the 8 bank holidays as a farmer how much holiday should I receive per year thanks Al
Hi,I work for a job agency,I have worked 4 9hr days and taken 1 day holiday in the same week,that is 44hrs I am entitled to,they are refusing to pay me the 4 hours in overtime pay because they said I had 1 day holiday so the agency will only pay the 4 hours in basic pay,is this right or wrong??? Many thanks Ian
The place I work for was taken over at the beginning of the year. I have just asked about holidays and getting holiday pay. My boss says that he doesn’t pay holiday pay, nor does he pay towards a work place pension. Also if I read your article right If I have not taken hoilidays by the end of the year I lose them .. does this mean if I haven’t sorted this out and he drags out not paying me holiday pay uintil the end of the year he gets away from having to pay it at all? I know what he is doing is not legal, but I cannot afford costs to take him to court, nor can I afford to not work. All the staff in his businesses are in the same boat. What is the best way to handle this?
10 hours minimum overtime per week. Missed this off previous comment
I have been employed for 14 years. I work 35 hours a week and on average 10 hours minimum a week. I noticed last month and again this month on my wage slip an additional entry in the payments section. This says holiday pay 2. I have asked the payments office what this sum is and they have said when you now take annual leave you are paid an average for f your overtime worked for the last 12 weeks in addition to your basic pay. Should this have been implemented back in 2014 as I have been on gov.uk? Please advise
Worked for the same company 9-4.30 5 days a week for 5 years. They said that they couldn’t afford a payroll system so I am self employed. I am expected to work these hours and have to do my own tax return and pay full NI contributions. I have to invoice them weekly and if there is no work for a few hours occasionally then I go home without pay. They expect me there for these hours and treat me as if employed i.e. what they will pay me which is just above the minimum wage. There is no negotiation involved in this. I have no holiday pay even for bank holidays and no sick pay. I am 60 now and feel that this an abuse of my rights as what they see of me is “their” staff. I am so fed up and all the government websites are little help. I can’t afford holidays as it will cost me more just for an unpaid week off. They are disgruntled when any worker wants the same time off too. Please advise me as to what to do.
I work in the security area. My rota is 4 on 4 off nights. However i usually work around 25 shifts per month. Between 7 and 9 extra overtime shifts paid at normal rate. Its my choice. But my question is do these extra shifts increase my holiday entitlement. I currently get 23 per annum
Hi I’m just wondering if anyone can help me regarding working overtime and holiday pay ? I’m am in a salaried position but am paid overtime when we stock take, which is usually quarterly, the hourly paid workers in my place of employment got their enhanced holiday paid rate with their Christmas pay but when I’ve asked if I’m entitled to my enhanced rate in my January pay I’m being told it’s only hourly paid workers who work regular overtime are entitled to this and because I’m salaried and don’t work overtime regularly I’m not. Any help would be great. Thanks in advance
I booked 3 days holiday and went away went back to work after my 3 days of and worked Thursday Friday sat sun instead of paying me for my holiday that I booked they said I could not be paid overtime when Ive had holiday so they have given me back my holiday but I always do overtime so now I will loose those days
Hi. Please can you help. I have just started a new job where i work 5 days a week but only work 5 hours per day. My employer has stated I am only entitled to 12 days holiday pay plus the bank holidays. I queried this and asked is that 12 full days so I can take my hols in hours because I thought that 12 days wasn’t correct as I work 5 days. They said no – 12 days is because it’s pro rata due to me only working 25 hours. There for someone who works the same hours but over 3 days gets the same holidays so they can take a week off and use only 3 days but I have to use 5 days to get a week off. Seems completely wrong. Please can you advise. Many thanks.
Hello i have been doing regular overtime for 8 years voluntary. I did not recieve holiday pay for overtime. I contacted my employer in april 18 requesting holiday including backdate years. I have in august received a lump sum. All i have been told is that it is backdated holiday from august 2017 owed no explanation of how it calculated. Am i entitled to two year backdate from date requested?
Hi I have been working for my employer for 2 years. Ive recently taken holiday and regularly work a 45 hr week in 5 days. Ive only been paid for 28 hrs of my holiday not the 36 it should be. Im told I havent earnt that entitlement. Ive checked the staff handbook and it quotes. After the 1st year of employment you will be entitled to your full holiday entitlement without having to accrue your holiday rights. I have mentioned this to my boss and she said that I am able to take them but they dont have to pay me for them. Is this correct? If so how is it possible for anyone to take a 2 week holiday in the summer?
Hi my girlfriends boss is disputing pay due to holiday. They are calculating her pay as a 47 week instead of 52 as she is entitled to 5 weeks holiday. Is this correct. Sounds as if they are calculating her salary less as they are paying her for less days when she should still be getting paid for the 5 weeks?
I have worked for the same company for over 20 years , can they use an accrual system to calculate my holidays? I have just been told that I cant take holidays until October as I have used my entitlement until then. Our holiday year runs from 01 April to 31 March each year
Hi i work 40 hrs a week have been working since jan 2018, im entitled to 28 days holiday. The last weeks holiday i took was only paid 20hrs. Is that fair?
I work 60 hours a week no over time after 40 hours when I hve a holiday in paid at 8 hour rate is that fair
Hi, I am a shift worker and have been employed by the same company for the past 24 years. I get paid 37.5 hour week but I work 4 x 12 hour shifts. I regularly work random over time shifts, probably on average of 36 hours extra a month, I get paid time and a half for these shift. Because I work in the Chemical industry with continuous process we are told that ‘The provisions of the Working Time Regulation do not apply to this sector of industry.’ My question is, should I be gaining extra holidays for working these overtime shifts? Many thanks Dino 17
Hi I have now worked for my employer for coming up to 4 and a half years but still have to accure my holidays. I am a part time worker working 15 hrs a week. Is this correct that I still have to accure my holidays if I have not accrued enough when I take my holiday I have to wait till the end of the year to be paid for the days I took and never got paid for.
On 27 of march i asked my days of holliday because all year i didnt use all so i asked my p45 and my days of holliday as i decide to ho back in my country , the agency told me they dont know if i will still recive my days of holliday and i was waiting 2 weecks with bo answear and after two weecks they told me i cant take my days of holliday because is after april so the end of financial year passed , i had 10 days of holliday and no one informed me that i cannot take my holliday or at least the money , even on 27 of march even no advertisement before
For the last 7 years i have done voluntary overtime. For the past 4 years i have regularly woked on average 15 hours per week overtime. When taking annual leave i am always financially worse off. It deters me taking leave and have to save up to taje time off. Should be be getting holiday pay? Also can i request a backdate and if so what is maximum backdate period? Thanks in advance
I have a contract of 6.25 hours per week. My holiday hours entitlement for my contact are 37.50 hours per year but I also work voluntary overtime above my contracted hours, can these extra hours I work count towards holiday pay?
@Juicy – As the article says: “voluntary overtime and payment for being on stand-by for emergency call outs should be taken into account when calculating statutory holiday pay.” So you holiday pay should be calculated on the average pay you received in the weeks (8 to 12 is usual but this has not been specifically stated anywhere) before your holiday.