Use the 12.07% holiday rules only after checking whether the worker genuinely has irregular hours or works part of the year under their contract. A regular employee working every Tuesday and Thursday throughout the year cannot be moved onto rolled-up holiday pay simply because they work part-time.
This guide covers the general rules in England, Scotland and Wales, checked 11 September 2026. Northern Ireland has separate working-time legislation.
Follow the contract through this decision tree
The definitions sit in regulation 15F of the Working Time Regulations 1998, inserted by the 2023 amending regulations. Test the arrangements for the relevant leave year, not the label your payroll software offers.
| Start here and follow the result | If yes | If no |
|---|---|---|
| Are paid hours wholly or mostly variable in each pay period under the contract? | Irregular-hours route | Go to the next row |
| Does the contract require work for only part of the year, with at least one unpaid, non-working period of a week or more while the contract continues? | Part-year route | Ordinary holiday rules |
| Does the worker qualify through either route? | Accrue statutory leave at 12.07%; choose lawful rolled-up pay or pay when leave is taken | Do not apply the special 12.07% entitlement or rolled-up-pay regime |
Sick leave and statutory leave do not turn someone into a part-year worker. Fixed-term employment ending after a summer season does not, by itself, satisfy the requirement for unpaid weeks within a continuing contract.
Consider three illustrative staff members. Jo works two fixed seven-hour days every week, all year: ordinary rules. Ali’s contract requires 10 to 30 hours depending on bookings, varying each weekly pay period: irregular hours. Pat works fixed hours during school terms, with qualifying unpaid weeks during the continuing contract: part-year.
Rotating shifts are another trap. Acas gives an example of fixed alternating weekly hours: the pattern changes, but the contractual hours are fixed, so that alone does not make the worker irregular. Check the whole arrangement before selecting a payroll category.
Accrual measures hours; rolled-up pay measures pounds
The special rules apply to leave years beginning on or after 1 April 2024. A calendar-year employer first entered that regime on 1 January 2025, not halfway through its 2024 leave year. By September 2026, that original transition is no reason to keep using an old calculation. (Government reform guidance)
For qualifying workers, accrue leave on the last day of each pay period at 12.07% of hours actually worked. Round the resulting fraction down below 30 minutes and up at 30 minutes or more. The statutory cap is 28 days per leave year; contractual extras require separate allowance.
The percentage comes from 5.6 weeks’ statutory leave divided by 46.4 working weeks, multiplied by 100. It is approximately 12.07%, not 5.6 divided by 52. That denominator matters because the calculation starts with work already done, rather than a full year including leave.
Suppose Ali works 120 hours in a month. The entitlement calculation is 120 x 12.07% = 14.484 hours, rounded to 14 hours. At 121 hours worked, 14.6047 rounds to 15. Keep the unrounded calculation as evidence, but record the statutory entitlement after the pay-period rounding.
The same worker, two lawful payslips
Assume Ali earns £14 an hour, receives only that pay for work, has the statutory minimum holiday entitlement and takes no leave in this month. The figures below are illustrative gross amounts before payroll deductions.
| Monthly entry | Pay holiday when taken | Rolled-up holiday pay |
|---|---|---|
| Work: 120 hours x £14 | £1,680.00 | £1,680.00 |
| Separate rolled-up holiday-pay line | £0.00 | £202.78 |
| Gross pay this month | £1,680.00 | £1,882.78 |
| Holiday hours added to leave record | 14 hours | 14 hours |
| Later seven-hour holiday, assuming £14 average hourly holiday pay | £98.00 when taken | £0 additional; already paid through uplifts |
The rolled-up amount is £1,680 x 12.07% = £202.776, rounded to £202.78. Do not round holiday money to whole pounds because leave hours are rounded to whole hours. They are different calculations.
One point payroll software will not decide for you: 12.07% is itself a rounded figure. The exact fraction 5.6/46.4 works out to 12.0689655…%, which on £1,680 gives £202.76, two pence less. Pick one and apply it consistently across the year rather than alternating, and say in your records which you used. Acas and gov.uk guidance both use 12.07%, so that is the safer default.
For the pay-when-taken column, assume the relevant reference-period average pay divided by average hours is £14. Seven hours then cost £98. A different earnings history changes that figure. It is not simply a promise to use today’s basic hourly rate.
Acas’s rolled-up-pay guidance requires the uplift on top of pay for work, paid at the same time and shown separately. Do not advertise an inclusive £14 rate and quietly carve holiday pay out of it. Check contractual changes with the worker before switching methods.
Under either method, Ali still books and takes the accrued time off. The £202.78 payment does not purchase the right to keep Ali working through holiday. Maintain separate records for entitlement, leave taken and holiday money paid.
Fixed part-time hours need their own calculation
Jo’s two seven-hour days give 14 hours a week. For a full leave year, 14 x 5.6 = 78.4 holiday hours, equivalent to 11.2 of Jo’s working days. Do not round that annual entitlement down to 11 days by copying the special pay-period rule.
If Jo has fixed pay of £196 weekly and no additional normal-pay elements, a week’s holiday pays £196. A 52-week average is not automatically required for everyone outside the irregular-hours category. GOV.UK’s holiday-pay table distinguishes fixed pay from variable earnings and shift patterns.
For ordinary workers, at least four statutory weeks use normal pay, including relevant regular extras; the additional 1.6 weeks can use basic pay. For irregular-hours and part-year workers, the normal-pay requirement covers the full statutory entitlement. A flat basic-rate calculation can therefore miss overtime or commission. (Acas holiday-pay guidance)
A 52-week average is not 52 calendar weeks regardless
Where the reference method applies, use the relevant 52 paid weeks, replacing unpaid weeks with earlier qualifying weeks, looking back no more than 104 weeks. If employment is shorter or fewer qualifying weeks exist, use the available period rather than inserting zeros. (Government calculation guidance)
For example, £15,600 across 52 qualifying weeks gives £300 for a week’s holiday. If those paid weeks occupy 60 calendar weeks because eight were unpaid, dividing by 60 would incorrectly produce £260. Check sickness and statutory-leave weeks separately; reduced statutory payments should not dilute normal holiday pay.
Sickness does not switch accrual off
Qualifying workers continue building leave during sickness and statutory leave, including maternity leave. Use average weekly hours from the relevant 52-week period, excluding sickness and statutory-leave weeks but including other non-working weeks; look back up to 104 weeks where necessary. This differs from the pay average’s unpaid-week treatment. (Acas absence guidance)
At an illustrative 20 average weekly hours, two weeks’ absence in one pay period produce 20 x 2 x 12.07% = 4.828 hours, rounded to five. If using rolled-up pay, continue the required average holiday-pay payment during absence; do not calculate 12.07% of zero hours and pay nothing.
If classification remains uncertain, resolve the contract and working-pattern evidence before using rolled-up pay. Paying when holiday is taken is available for qualifying workers too, but it does not remove the need to calculate entitlement correctly. Misclassification risks underpaid holiday and complaints.
Before the next payroll, record each worker’s category, leave-year start, method and calculation. Holiday records must now be kept for at least six years under the rules effective from 6 April 2026. Include the cost when checking your first employee’s true cost and the employer cost calculator, while keeping actual leave available. If you are using the 12.07% figure to build a price rather than a payslip, pricing a cleaning contract works it through as a per-worked-hour cost.
