How to calculate holiday entitlement for part-timers

Holiday entitlement should be worked out on the number of hours normally worked in the week. If these hours vary, employers will need to use an average working week to calculate holiday entitlement – reserving the right to amend it later in the year to reflect actual hours worked, or, obtain the permission of the worker (a legal requirement) to recover holiday money overpaid. Many employers use a figure of 12.07% of hours worked to calculate holiday for those that work irregular hours.

The sums involved can leave difficult amounts of holiday time and pay to allocate to the worker and there are a number of ways this can be resolved. However, it is advisable for employers to take HR or legal advice to ensure they are fairly apportioning holiday entitlement and pay in this respect.

It is also worth bearing in mind that the averaging method applies only when there are no normal working hours. If there are normal hours of work, then holiday pay should be paid at the employee’s usual rate.

For those with variable hours, the impact of a recent legal case is that in any situation where the 12.07% figure gives a different result to the averaging method, an employer could be liable for the difference. It is recommended therefore, that employers check their holiday pay calculations, particularly in respect of employees who work term time only, or similar variable patterns where there are periods of time without work. 

Fixed hours

If working hours do not vary (part time or full time) holiday pay will be calculated using the usual pay rate.

For example, if 37 hours every week are worked and paid at £400 a week, when a week’s holiday is taken the worker must get paid £400.

Holiday pay for monthly paid workers can also be calculated using the tool on Gov.uk.

What if hours are not fixed?

If a worker has no fixed or regular hours, their holiday pay will be based on the average pay received over the previous 52 weeks. An example of this is for casual work on a zero-hours contract, or for those who work shifts that change without a fixed pattern.

If for any of the 52 weeks no pay was earned, employers should use an earlier week in its place for calculating holiday owed.

If only a small amount of pay for a week was received – e.g. for Statutory Sick Pay, another week should be used for the purposes of calculating holiday, such as when where a worker’s usual pay was received. This will ensure workers get the same pay when on holiday, or at work.

Employers should only count back as far as needed to get 52 weeks of a worker’s usual pay. If necessary, employers can look at pay received over the previous 104 weeks, but no further.

What if a worker has not been employed for 52 weeks?

If a worker has been employed for less than 52 weeks, employers should look at how many full weeks of employment there have been e.g. if 26 full weeks have been worked, look at the average pay received by the worker during those weeks to calculate their holiday pay.

Examples for working out holiday pay where there are no fixed hours can be found on Gov.uk.