Holiday Pay Calculation UK: the 52-Week Average Rule, 2026

UK holiday pay rules tightened in 2024. Most workers must now have their holiday pay calculated on average earnings over the previous 52 weeks, including regular overtime, commission and shift premiums. Many employers - especially in retail, hospitality and care - are still paying basic salary only. That can be unlawful.

This guide explains the current rules, gives worked examples for the four most common pay patterns, and tells you what to do if your holiday pay looks low.

The legal framework

Holiday pay rules in the UK come from:

• Working Time Regulations 1998 (4 weeks of EU-derived leave, plus 1.6 weeks UK additional leave = 5.6 weeks total = 28 days for a full-time worker).
• Employment Rights Act 1996 sections 221-224 - the "week's pay" calculation.
• Bear Scotland v Fulton (2014) - established that overtime should count towards holiday pay.
• The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 - introduced the 52-week reference period from 6 April 2020, replacing the old 12-week one.
• Brazel v Harpur Trust (2022, Supreme Court) - part-year workers on permanent contracts get the full 5.6 weeks, and their holiday pay must not be pro-rated down using 12.07%. This is no longer the position for a current leave year: see the next entry.
• Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (S.I. 2023/1426) - in force from 1 January 2024. For leave years beginning on or after 1 April 2024 these displace Brazel for irregular-hours and part-year workers: entitlement is accrued at 12.07% of the hours actually worked in each pay period, and rolled-up holiday pay is permitted for the same two groups. GOV.UK states both halves: "For leave years that begin before 1 April 2024, holiday entitlement will continue to be calculated in the same way for irregular hours and part-year workers", and "For leave years beginning on or after 1 April 2024 ... holiday entitlement for these workers will be calculated as 12.07% of actual hours worked in a pay period" (GOV.UK).

Brazel is still the law for anything it governs that the 2023 Regulations did not touch, and it still decides a historical claim about a leave year that began before 1 April 2024. What it no longer does is stop a 12.07% accrual for an irregular-hours or part-year worker today. A page that quotes Brazel without that date is telling a term-time worker they are owed more than they are.

The combined effect: workers with variable earnings must receive holiday pay calculated on a 52-week rolling average that includes overtime, commission, shift premiums and certain allowances.

One qualification runs through everything below. Only 4 of the 5.6 weeks have to be paid at this "normal remuneration" rate. The additional 1.6 weeks may lawfully be paid at basic rate (GOV.UK). For a full-time worker that is 20 days uplifted and 8 days not. Many employers pay the higher rate across all 28 days for simplicity, but they are not obliged to.

Workers in scope of the 52-week rule

The 52-week rule applies to:

• Workers with no normal working hours (e.g. zero-hours contracts, casual workers).
• Workers whose pay varies with the amount of work done (e.g. piece-work, commission-only, shift workers with variable shifts).
• Workers with normal hours BUT whose pay varies by reference to the time of work (e.g. shift workers with regular night/weekend premiums).

For workers with fixed regular hours and fixed pay (e.g. salaried 9-to-5 office workers with no overtime, no commission, no shift premiums), the calculation is simpler - holiday pay equals one week's normal pay.

What must be included

The current legal position on each pay element:

The 52-week reference period

For each week of holiday taken, look back 52 weeks and average the pay received in those weeks. Skip:

• Weeks with zero pay (e.g. unpaid leave, statutory pay-only weeks).
• Weeks during which the worker received SSP, SMP, SPP, ShPP, or SAP (statutory parental and sick pay weeks are excluded).

If a worker has fewer than 52 weeks of paid history, use what's available. If they have less than one week of paid history (e.g. brand new starter), use whatever data exists.

If skipping leaves you with fewer than 52 paid weeks of history, you can look further back - up to a maximum of 104 weeks (two years) of look-back to find 52 paid weeks.

Worked example 1 - fixed salary, no variable pay

Alex earns £36,000/year, works 9-to-5 Mon-Fri, no overtime, no commission, no shift premiums.

Holiday pay for 1 day = (£36,000 ÷ 52) ÷ 5 = £138.46.

Simple. The 52-week average rule doesn't add complexity because the average is the same as the salary.

Worked example 2 - salary plus regular overtime

Priya earns £28,000/year base salary. She regularly works 5 hours' overtime per week at 1.5×, paid at her normal hourly rate of £14.42.

Without the 52-week rule (basic salary only): 1 week's holiday = £28,000 ÷ 52 = £538.46.

With the 52-week rule (including overtime):

• Weekly base: £538.46
• Weekly overtime: 5 × 1.5 × £14.42 = £108.15
• Average weekly pay: £646.61
• 1 day's holiday pay: £646.61 ÷ 5 = £129.32

Basic-only pay would give £538.46 ÷ 5 = £107.69 a day, so the 52-week average is £21.63 more per holiday day.

The uplift is owed on the 4 weeks of EU-derived leave, which is 20 days for a full-time worker, not on the full 28: 20 × £21.63 = £432.60 a year. (If Priya's employer applies the higher rate to all 28 days, as many do, it is £605.64 - but only £432.60 of that is a legal entitlement.)

If Priya's employer is paying basic-only holiday pay, that is roughly £433 a year underpaid. Backdated claims for unlawful deduction from wages cannot reach back more than two years in Great Britain, a limit in force for claims made on or after 1 July 2015 (GOV.UK), so the realistic recovery is about £865. Northern Ireland has no equivalent two-year cap.

Worked example 3 - variable hours (zero-hours)

Tom is on a zero-hours contract and has been with the employer for a year. He works varying hours week to week. Of the 52 weeks before his current holiday request, 5 are skipped - 3 unpaid leave, 2 SSP - leaving 47 paid weeks in which he earned £18,200. Because he has no service before those 52 weeks, there is nothing further back to pull in, so the average is taken over the 47 weeks he does have.

Average weekly pay: £18,200 ÷ 47 = £387.23.

A worker with longer service would be treated differently: the employer would keep going back, up to the 104-week limit, until it had 52 paid weeks.

For each holiday day Tom takes, he gets £387.23 ÷ 5 = £77.45.

His employer must look back 52 weeks and recalculate every time he takes leave.

Worked example 4 - rolled-up holiday pay (post-Jan 2024 change)

For irregular-hours workers and part-year workers (those who don't work all year, like term-time-only), the 2024 Regulations re-permitted rolled-up holiday pay - paying an extra 12.07% on top of every pay packet to cover holiday pay, instead of paying it when the leave is taken.

12.07% comes from 5.6 weeks ÷ (52 − 5.6 weeks) = 0.1207.

If Tom's employer rolls up, his every payslip should show:

Hours worked × hourly rate:        £400.00
Plus 12.07% rolled-up holiday pay:  £48.28
Gross pay this period:             £448.28

The rolled-up element must be clearly itemised on the payslip as "rolled-up holiday pay" - bundling it into the hourly rate is not lawful.

Rolled-up holiday pay is only permitted for workers with no normal working hours or part-year workers under the 2024 Regulations. For workers with normal regular hours, you cannot roll up - you must pay holiday pay when leave is taken.

How to spot under-payment on your payslip

Three patterns to check:

1. Holiday pay equal to your basic-salary day-rate when you work regular overtime. If your normal weeks include overtime/commission/shift premiums and your holiday weeks don't, the average is lower - that's underpayment.
2. No "holiday pay" line at all on a zero-hours contract. Either you're owed accrued holiday pay when you take leave, or your employer should be itemising rolled-up pay on every payslip - never just paying basic hourly rate.
3. Holiday pay not adjusting when you've recently had a particularly busy stretch (more overtime/shifts). The average should reflect it within 4-8 weeks.

To check whether those holiday, tax and NI lines look right on your own payslip, see How do I check my payslip is correct?.

What to do if it's wrong

1. Email payroll, in writing, with the dates and the calculation you think is correct.
2. Ask for the figure-by-figure breakdown they used.
3. Cross-check against the 52-week rule and the inclusion list above.
4. Escalate to Acas (0300 123 1100) for unresolved disputes.

You can claim back two years of underpaid holiday pay through an Employment Tribunal (under the Deduction from Wages (Limitation) Regulations 2014).

The time limit itself is changing. Where it starts on or after 1 October 2026, you have 6 months less 1 day from the deduction to notify Acas; where it started before that date, the old 3 months less 1 day applies (Acas, employment tribunal time limits). If a payday sits either side of 1 October 2026, work to the earlier deadline unless you have taken advice.

Disclaimer

PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated employment-law advice. Holiday-pay rules are case-law-developed and continue to evolve; for unresolved disputes or substantial underpayment claims, consult Acas, Citizens Advice, or an employment solicitor.