Holiday Pay Explained: What Employers Need to Know

Holiday pay might seem straightforward, but it’s one of the most commonly misunderstood areas of employment law. From calculating entitlements to navigating bank holiday pay, employers need to stay compliant while keeping things fair and transparent for their teams.

What is Holiday Pay?

In the UK, most workers are legally entitled to 5.6 weeks of paid holiday per year -that’s 28 days for someone working five days a week. This includes statutory leave and can incorporate bank holidays, depending on your contract terms.

Bank Holidays: Do You Have to Pay Extra?

Bank holidays are a hot topic and rightly so. Here’s what employers need to know:

• No statutory right to extra pay: There’s no legal requirement to pay more (e.g. double time) for working on a bank holiday. It all comes down to the employment contract.
• Not all employees get the day off: Employers aren’t obliged to give bank holidays as paid leave. You can include them within the 5.6 weeks’ entitlement or offer them in addition.

How to Calculate Holiday Pay

Holiday pay is based on average weekly earnings over the previous 52 paid weeks. If an employee hasn’t worked for 52 weeks, use the average from the weeks they have worked. This ensures fairness and compliance with the Working Time Regulations.

FAQs

Q: Do I have to pay staff extra for working on a bank holiday?

A: Not unless their contract says so. There’s no legal requirement for double pay.

Q: Can I include bank holidays in the statutory 5.6 weeks?

A: Yes. You can count bank holidays as part of the statutory entitlement or offer them on top.

Q: How do I calculate holiday pay for part-time staff?

A: Use the holiday entitlement calculator and ensure pay reflects their average earnings, not just contracted hours.

Q: What if my employee works irregular hours?

A: You’ll need to calculate their average pay over the last 52 paid weeks. Rolled-up holiday pay may apply if they meet the criteria.

Need Support?

Holiday pay doesn’t have to be a headache. At Altum HR, we help employers stay compliant, fair, and confident in their policies. Whether you need help updating contracts, calculating entitlements, or communicating changes to your team – we’re here to support you.

Get in touch for tailored advice