5.6 weeks is the legally correct statutory holiday entitlement for most UK workers. For workers with genuinely irregular or variable hours, such as Zero Hour, Irregular Hours, Casual, and Part-Year Workers, statutory holiday entitlement should be calculated as 12.07% of actual hours worked.
This percentage represents 5.6 weeks of leave across a working year:
- 52 weeks − 5.6 weeks = 46.4 working weeks
- 5.6 ÷ 46.4 = 12.07%
This means:
- Every hour worked accrues 0.1207 hours of holiday
- Every £100 earned accrues £12.07 of holiday pay
🔑 Key: The 12.07% method should be used for Zero Hour, Irregular Hours, Casual, and Part-Year Workers to ensure pro-rata compliance and to avoid both underpayment and over-accrual.
Implementing the 12.07% Method
There are two compliant payroll models for implementing the 12.07% method for zero, irregular, casual, and part-year workers:
Option 1: Rolled-Up Holiday Pay (Real-Time Payment)
Following the 2023–2024 reforms, rolled-up holiday pay is once again explicitly permitted, provided it is implemented correctly.
How it works:
- Workers are paid their normal hourly wage
- An additional 12.07% holiday pay is paid at the same time
- Holiday pay is separately itemised on payslips
Because holiday pay is paid as it accrues, workers receive their full holiday entitlement alongside their wages.
Practical effect:
When a worker does not work, for example, because they take time off, decline shifts, or are away on holiday, no further pay is made for those periods, as holiday pay has already been received.
This does not remove the worker’s right to rest or time away from work; it simply changes when holiday pay is paid.
Compliance requirements:
- Holiday pay must be clearly labelled on payslips
- The calculation must be accurate
- Workers must still be encouraged to take rest periods
This model is administratively simple and widely used across hospitality.
Option 2: Holiday Fund (Accrual Model)
Under this model, holiday pay accrues as hours are worked and is held in a separate balance.
How it works:
- 12.07% of hours worked is added to a holiday fund
- The balance is shown separately on payslips
- Workers request leave and are paid from the fund during time off
Employers may, at their discretion, allow holiday to be taken in advance, creating a negative balance. A negative balance will reduce as further hours are worked. Allowing a negative balance creates a financial risk for employers and should be carefully controlled.
Compliance requirements:
- Any unused holiday balance must be paid in full when a worker leaves
- Balances must be accurately tracked
- When a worker leaves, negative balances can only be recovered from final pay
- Employers cannot legally pursue ex-workers for repayment beyond final pay
This model provides income continuity and is often preferred by seasonal businesses.
🔑 Key: Both models are lawful, but both require accurate tracking and clear payslip itemisation
A Compliance Rule of Thumb for Employers
🔑 Key principles:
- Fixed hours → use the 5.6 weeks method
- Irregular or zero hours → use the 12.07% method
- Always include bank holidays within the total
- Always itemise holiday pay clearly on payslips
Following these principles significantly reduces payroll risk. Correct holiday calculations protect both workers and employers.
Compliance Disclaimer
This article is provided for general guidance only and does not constitute legal advice. Holiday entitlement and pay calculations may vary depending on individual circumstances.
Further guidance: