Employment Law

Holiday Pay & Entitlement UK 2025 — What You're Owed and How to Claim It

26 May 2025 ⏱ 10 min read 🇬🇧 England & Wales Last reviewed: May 2025

Holiday pay is one of the most frequently underpaid employment rights in the UK. Millions of workers — particularly those with irregular hours, regular overtime, or commission-based pay — have been receiving less holiday pay than the law requires, often without knowing it. This guide explains exactly what you are entitled to, how holiday pay must be calculated, and what to do if you have been shortchanged.

Your Basic Holiday Entitlement

Almost all workers in England and Wales are entitled to a minimum of 5.6 weeks of paid annual leave per year under the Working Time Regulations 1998. For someone working five days per week, this is 28 days. For part-time workers it is pro-rated — someone working three days per week gets 16.8 days (3 × 5.6). Bank holidays can be included in the 5.6 weeks — it is up to your employer whether to give bank holidays on top or count them as part of your 5.6-week entitlement.

Your employer may give you more than 5.6 weeks — many give 25 or 30 days plus bank holidays — but they cannot give you less. Any contractual holiday above the statutory minimum is subject to your contract's terms, but the statutory minimum cannot be waived.

Who Is Entitled to Holiday?

Paid holiday is a right for all workers, not just employees. This includes part-time workers, agency workers, casual workers, and most people working through personal service companies. The right begins from the first day of work — there is no qualifying period. Self-employed people who are genuinely in business on their own account are not covered by the Working Time Regulations, but many people labelled "self-employed" are actually workers in law and are entitled to holiday pay.

Calculate your exact holiday entitlement and pay with our Holiday Entitlement Calculator and Holiday Pay Calculator.

How Holiday Pay Must Be Calculated — The Big Issue

For many years, employers calculated holiday pay based on basic salary alone — ignoring overtime, commission, and other variable pay. A series of landmark Employment Tribunal and Court of Justice of the EU decisions changed this, and the law has been evolving rapidly.

The "Normal Remuneration" Rule

Holiday pay must reflect your "normal remuneration" — what you would normally earn if you were at work. This principle derives from the EU Working Time Directive and was established in UK case law by decisions including British Airways v Williams (CJEU, 2011) and Lock v British Gas (Employment Tribunal, 2014). The principle is that workers should not be financially worse off for taking leave — otherwise they would be financially discouraged from taking it.

What Must Be Included in Holiday Pay?

Based on the current case law, the following must be included in holiday pay if they are paid regularly and intrinsically linked to the performance of your job:

Regular overtime — including guaranteed overtime and non-guaranteed overtime that is worked regularly in practice
Commission payments — if commission is a regular feature of your remuneration (established in Lock v British Gas)
Shift premiums and allowances — payments for working unsociable hours or specific shifts that are regularly worked
Stand-by and call-out payments — if regularly received
Travel allowances linked to job performance — where they are part of normal pay rather than expense reimbursement

What does NOT need to be included: purely voluntary overtime that is not worked regularly, genuine expense reimbursement, and ad hoc payments that are not a normal feature of remuneration.

The Calculation Reference Period

For workers with variable pay, holiday pay is calculated by averaging earnings over the 52 weeks prior to the leave (or the actual number of weeks worked if less than 52), ignoring weeks where no remuneration was received. This 52-week reference period was extended from 12 weeks by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2019.

The Two "Pots" of Holiday — 4 Weeks and 1.6 Weeks

UK holiday law distinguishes between two elements of the 5.6-week entitlement:

Four weeks (20 days for a 5-day worker) — derived from the EU Working Time Directive, this portion must be paid at "normal remuneration" including overtime, commission, and supplements as described above
1.6 weeks (8 days for a 5-day worker) — additional UK entitlement, which only needs to be paid at the contractual rate (basic salary only is acceptable for this portion)

In practice, most employers calculate all 5.6 weeks at normal remuneration (easier and safer), but some deliberately pay the 1.6-week add-on at basic rate only. This is technically permissible for the additional entitlement, though confusing in practice.

Rolled-Up Holiday Pay

Rolled-up holiday pay means including an element of holiday pay in every pay packet instead of paying it separately when the worker actually takes leave. For many years this was unlawful following a CJEU ruling. However, since January 2024, rolled-up holiday pay has been lawful for "irregular hours workers" and "part-year workers" under new regulations, provided it is clearly identified on the payslip as a holiday pay supplement (at least 12.07% of pay).

For workers with regular, fixed hours, rolled-up holiday pay remains unlawful. If you are on a zero hours or irregular-hours contract, rolled-up holiday pay at 12.07% is now the employer's preferred calculation method — check your payslip to ensure it is clearly labelled and at the correct rate.

Carrying Over Holiday — Use It or Lose It?

In principle, statutory holiday cannot be carried over from one leave year to the next — you either use it or you lose it. However, there are important exceptions:

Illness and sickness absence — if you are too ill to take holiday during the leave year, you can carry it over. Following Plumb v Duncan Print Group (2015), workers can carry over up to four weeks of untaken holiday due to sickness for up to 18 months after the leave year in which it accrued.
Family leave — holiday continues to accrue during maternity, paternity, and adoption leave, and untaken holiday can be carried over to the following year.
Employer refused to allow you to take leave — if your employer failed to allow or encourage you to take leave, you may be able to carry it over or claim it as pay on termination.
COVID carry-over rules — temporary regulations allowed workers to carry over up to four weeks of leave for two years where it was not reasonably practicable to take it due to COVID. These provisions have now largely expired.

Holiday pay on termination: When your employment ends, you must be paid for all unused statutory holiday accrued in the current leave year. Your employer cannot refuse to pay accrued holiday on termination — this is an unlawful deduction from wages. If you have taken more holiday than you have accrued, your employer can deduct the overpayment only if your contract expressly permits this.

How Far Back Can You Claim Underpaid Holiday?

This is one of the most important and litigated questions in holiday pay law. The answer is complex:

Claims in the Employment Tribunal

An Employment Tribunal claim for unlawful deduction from wages (the usual route for holiday pay underpayments) must be brought within three months of the last deduction complained of. However, a "series of deductions" — a succession of underpaid holiday payments — can be treated as a single claim, with the three-month clock running from the last deduction in the series.

The landmark Supreme Court case Agnew v Linfield College (Northern Ireland, 2023) confirmed that breaks between deductions of three months or more break the series, limiting the back-pay recoverable. In Great Britain, the Bear Scotland v Fulton case (2014) had introduced a two-year backstop limiting claims to two years — but this was based on specific interpretation of the Northern Ireland legislation and its application in Great Britain was later questioned. HMRC guidance and tribunal practice continues to evolve.

Practically, workers should bring claims promptly — the earlier you act, the more back pay you can potentially recover.

Step-by-Step: How to Claim Underpaid Holiday Pay

Gather your payslips — collect payslips and bank statements for the period you believe you were underpaid. Work out the gap between what you were paid on leave and what you should have been paid based on normal remuneration.
Raise it with your employer informally — many holiday pay underpayments are the result of administrative practice rather than deliberate policy. Raising it directly may resolve it quickly, especially where the employer is not aware of the legal requirement to include overtime.
Submit a formal grievance — if informal discussion fails, put your complaint in writing as a formal grievance. Keep a copy of everything. Your employer must follow the ACAS grievance procedure.
Contact ACAS for early conciliation — before making an Employment Tribunal claim, you must notify ACAS. Early conciliation is free and often resolves disputes without the need for a hearing.
Lodge an Employment Tribunal claim — if conciliation fails, lodge the claim on the ET1 form within three months of the last underpayment. Claims for unlawful deduction from wages can cover the whole series of underpayments.

Frequently Asked Questions

Do bank holidays count as part of my 5.6 weeks' holiday?+

It depends on your contract. Employers can include bank holidays in the 5.6-week statutory minimum or give them on top. If your contract says "28 days including bank holidays," all 8 bank holidays count towards your 5.6 weeks. If it says "20 days plus bank holidays," you get 20 days plus 8 bank holidays, totalling 28 — but the bank holidays are on top of the statutory minimum. Many workers are surprised to find their "28-day entitlement" includes rather than excludes bank holidays.

Can my employer refuse to let me take holiday when I want?+

Yes, within limits. Your employer can refuse specific holiday requests if there are operational reasons, provided they give you at least as much notice as the period of leave requested (so two weeks' notice to refuse a one-week holiday request). However, your employer must ensure you are able to take your full statutory entitlement within the leave year — refusing all holiday requests or creating conditions that prevent you taking leave is unlawful.

I work irregular shifts — how do I know if my holiday pay is correct?+

Calculate your average weekly pay over the 52 working weeks before the holiday (excluding weeks with no pay). This average should include shift supplements, regular overtime, and other variable pay. Compare this to what you actually received as holiday pay. If your employer paid you only basic rate during holiday, and you regularly earn more than basic through overtime or supplements, you are likely being underpaid.

My employer says I agreed to forfeit unused holiday. Is this valid?+

You cannot legally waive your statutory holiday entitlement. Any contractual term that purports to replace statutory leave with payment (other than on termination) or that requires you to forfeit untaken statutory leave at the end of the year is void in so far as it relates to the statutory entitlement. You can legitimately agree to forfeit enhanced holiday (above the statutory minimum), but not the 5.6 weeks minimum. The right to take statutory leave cannot be contracted out of.