How to calculate holiday entitlement

Employers have a legal obligation to provide their staff with paid holiday during the working year. Every employee and almost all workers are entitled to paid holiday by law and it's important that everyone understands how much holiday each person is entitled to and how much pay they should receive. Read this guide to make sure you understand your obligations as an employer and your rights as an employee.

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How much holiday is an employee entitled to?

Most employees who work a normal 5-day week (ie Monday to Friday) are entitled to 5.6 weeks of holiday which is equal to 28 days in the working year. This can be inclusive or exclusive of bank and public holidays.

Employers can use a 'leave year' or 'accrual system' to calculate an employee's holiday entitlement. Employers must tell their staff the dates for their statutory leave year as soon as they start working. An employee must take their paid holiday during the statutory leave year which can either be set out in the employment contract, or if the contract doesn't state, then the day the employee first started working. For example, a company's leave year could run from 1 January to 31 December if stated in the contract. An employee who starts part-way through a leave year will only be entitled to part of their total annual leave for the current leave year, depending on how much of the year is left.

The accrual system is where the employee gets one twelfth (1/12) of their leave in each month they've worked. For example, an employee who has worked for 3 months will be entitled to one quarter (¼) of their total leave (ie seven days if they work a normal 5-day week).

Calculating holiday entitlement

The legal obligation to provide paid holiday not only extends to full-time workers, but to part-time workers, agency workers and casual workers as well. However, calculating the exact amount of holiday a particular worker is entitled to is important to stay compliant with the law. The exact amount of holiday will depend on the type of employee or worker they are. You can calculate an individual worker's statutory holiday entitlement by using the government's webtool.

Full-time workers

Full-time workers are entitled to 5.6 weeks (28 days) paid holiday per year, if they work 5 days a week. 5.6 weeks is the maximum amount of paid holiday an employee is obliged to provide in the working year. If an employee works more than 5 days a week (ie 6 or 7), they will still only be entitled to 5.6 weeks of paid holiday a year. An employer can decide whether to include bank and public holidays as part of a worker's holiday entitlement or give these as extra leave and can choose to offer more leave than the legal minimum.

Part-time workers

Part-time workers are entitled to paid holiday, however, they don't need to be given the full legal minimum as they work less than full-time workers. Part-time workers are given paid holiday on a pro-rata basis. Their holiday entitlement is calculated based on how many days or hours a week they work. For example, if a part-time employee worked 4 days a week, they would be entitled to 22.4 days of paid holiday in a year. The calculation is 4 days x 5.6 weeks. Where the answer is not a round number, you should always round up to the nearest half day.  For example, a worker who is working 3 days a week gets 17 days annual leave, although the actual entitlement is 16.8 days. 

It is also important to remember that part-time workers should not be treated less favourably than full-time workers, eg if full-time employees are given extra days off then this must also be given to part-time employees as well.

Workers on casual or irregular working hours

This mainly applies to casual staff or workers on zero hours contracts. Zero hours workers are also entitled to statutory paid holiday. Calculating the amount of holiday a worker on a casual contract (ie zero hours contract) can be complicated and it's best to calculate it on an accrual basis in hours. The holiday entitlement of 5.6 weeks is equal to 12.07% of the hours a casual worker has worked. You would then have to multiply 12.07% by the number of hours worked by the worker to calculate how much holiday entitlement they should have. For example, if a worker on a zero hours contract has worked 10 hours then they would be entitled to 1.21 hours (or 72.6 minutes) of paid holiday. The calculation is 12.07% x 10 hours.

Shift workers

Shift worker's holiday entitlement is calculated by using an average of their shifts over a 12 week period.

Calculating holiday pay

All employees and workers who take paid holiday should also be paid the same rate that they're normally paid for their work. A week's pay is calculated according to the kind of hours someone works and how they're paid for the hours.

A shift worker with fixed hours should receive holiday pay equal to the average number of weekly fixed hours the worker worked in the previous 12 weeks at their average hourly rate.

Casual workers and those on zero hours contracts are entitled to holiday pay and are eligible for payment in lieu of any untaken statutory paid holiday on termination of their employment. This reflects the same rights given to full-time and part-time employees. Holiday pay for casual workers is calculated by multiplying the number of hours they are entitled to paid holiday and their hourly wage.

When can leave be taken?

It is common practice for employers to require their workers to give notice of a request to take paid holiday. The amount of notice is usually twice as long as the amount of leave a worker wishes to take (eg 4 days' notice for 2 days' leave).

Can an employer decide when leave can be taken?

An employer has discretion for when an employee must take their holiday and can restrict when leave can be taken. However employers should try to accommodate all requests from their staff.

What happens if an employer doesn't comply with the law?

Employees and workers are allowed to make a complaint to the Employment Tribunal about an employer's refusal to allow reasonable time off. These rights are also regulated and exercised by the Health and Safety Executive (HSE) and local authorities. Employers could face heavy penalties for not allowing their workers to take time off or not paying the correct amount of holiday pay.

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