Holiday Entitlement for Irregular Hours UK in 2026

Holiday entitlement for irregular hours workers has become one of the most legally sensitive areas of UK employment law. The combination of variable working patterns, historic case law, payroll complexity and the Government’s 2024 reforms means employers are now exposed to a higher risk of underpayment claims, unlawful deduction disputes and retrospective liability if systems are not aligned correctly.

This guide explains how holiday entitlement works for workers with irregular hours and part-year working patterns, focusing on what the law requires, the commercial decisions employers must make and the compliance failures that most commonly trigger disputes. It is written for HR professionals and business owners who need legally defensible processes rather than high-level commentary.

For wider context on employer compliance priorities, see employment law expectations for employers. For the baseline statutory rules that apply across the workforce, see holiday entitlement.

What this article is about: This is a compliance-grade employer guide to holiday entitlement for irregular hours and part-year workers. It explains how to classify workers correctly, how statutory entitlement accrues, how holiday pay must be calculated, when rolled-up holiday pay can be used, how carry-over operates and how to manage termination payments and record-keeping defensibly.

Section A: Is this an “irregular hours worker” or “part-year worker” and why does it matter?

Misclassification is the single biggest source of holiday entitlement risk for employers. Before entitlement or pay can be calculated, employers must first determine whether the worker legally falls within the irregular hours or part-year worker categories introduced by the 2024 reforms. Getting this wrong invalidates every downstream calculation.

1. When is a worker legally classed as an “irregular hours worker”?

What the law requires

A worker is an irregular hours worker where, under their contract, the number of hours they are required to work in each pay period is wholly or mostly variable. This is a legal classification tied to the contractual requirement, not simply how hours happen to fluctuate in practice.

The focus is on:

• the pay period used for wages (weekly, fortnightly, monthly)
• whether there is a fixed minimum or predictable pattern of hours within that pay period

Zero-hours workers and bank staff will almost always fall into this category. However, a worker can still be irregular hours even if they work frequently or consistently, provided the contract does not require a fixed number of hours in each pay period. For related risk examples, see zero-hour contract holiday pay.

Workers on rotating shift patterns or annualised hours arrangements are not automatically irregular hours workers. If the contract specifies a fixed number of hours averaged across the year or a predictable rota cycle, the irregular hours regime may not apply.

DEC clarification: “Wholly or mostly” is not defined as a fixed numerical threshold in legislation. Employers should treat it as a fact-sensitive assessment linked to the contractual requirement across the pay period, supported by a documented rationale.

What the employer must decide or do

Employers must:

• identify the contractual pay period
• assess whether hours are contractually fixed or variable within that period
• record the classification decision and rationale

This is not a payroll preference. It is a legal gateway decision that determines whether the 12.07% accrual method and rolled-up holiday pay can be used lawfully.

What happens if you get it wrong

If an employer incorrectly treats a regular hours worker as irregular:

• the 12.07% method may under-accrue statutory leave
• rolled-up holiday pay may be unlawful
• underpayments can be reclaimed as unlawful deductions from wages

Tribunal claims often focus on misclassification rather than arithmetic errors. Employers who cannot evidence how and why a worker was classified face significant retrospective exposure.

2. What legally defines a “part-year worker”?

What the law requires

A part-year worker is someone who:

• is engaged under a continuing contract
• is required to work only for part of the year
• has periods of at least one week during the term of the contract when they are not required to work and are not paid

This definition is narrower than many employers assume. The fact that someone works term-time or seasonally does not automatically make them a part-year worker if they continue to be paid during non-working periods.

A common example of a genuine part-year worker is a term-time education worker who is only paid when working and receives no pay during school holidays. For sector-specific context, see term time only contracts holiday pay.

What the employer must decide or do

Employers must examine:

• whether non-working weeks are unpaid
• whether pay is smoothed across the year
• whether the contract requires availability during “non-working” periods

Where salary is paid evenly across the year, the worker will usually not meet the “not paid” requirement, even if they do not attend work for extended periods.

What happens if you get it wrong

Misclassifying salaried term-time or annualised workers as part-year:

• exposes the employer to entitlement under-calculation
• undermines the legality of rolled-up holiday pay
• creates inconsistencies between contractual pay and statutory leave rights

These cases frequently surface on termination, when accrued but untaken holiday is calculated incorrectly.

3. Who is excluded from the irregular hours and part-year regimes?

What the law requires

The irregular hours and part-year frameworks do not apply to:

• workers with fixed weekly or monthly hours
• employees on predictable rotating shift patterns
• staff on annualised hours where total hours are contractually fixed

These workers remain subject to the standard Working Time Regulations framework and must not be swept into the 12.07% system for administrative convenience.

What the employer must decide or do

Employers must ensure:

• HR, payroll and operational managers apply the same classification logic
• systems do not default workers into the irregular category based on variability alone
• contracts and working practices are aligned

What happens if you get it wrong

Applying the irregular regime to excluded workers is a compliance failure, not an efficiency gain. It commonly results in inconsistent holiday accrual, incorrect termination payments and heightened litigation risk once discrepancies are identified.

Section A summary: employer risk control

Before calculating holiday entitlement or pay, employers must classify the worker correctly, document the decision and align payroll systems with legal status. If classification is wrong, every subsequent holiday calculation is legally unsafe, regardless of how well it is administered.

Section B: What holiday entitlement are irregular hours workers legally entitled to?

Once a worker has been correctly classified as an irregular hours worker or part-year worker, the next question employers ask is how much statutory holiday that individual is legally entitled to receive. This is where many employers make incorrect assumptions, particularly following the 2024 reforms, by believing the changes altered the underlying entitlement itself. They did not.

1. Do irregular hours workers still have a right to 5.6 weeks’ statutory holiday?

What the law requires

Yes. Irregular hours workers and part-year workers are entitled to the same statutory minimum holiday entitlement as any other worker under the Working Time Regulations 1998: 5.6 weeks of paid annual leave per leave year.

The reforms introduced in 2024 did not reduce this entitlement and did not create a different statutory allowance for irregular workers. The entitlement remains capped at 5.6 weeks and applies equally across the workforce.

What differs for irregular hours workers is how that entitlement accrues and is measured, not the total statutory maximum itself.

It is critical to understand that “5.6 weeks” is a legal construct, not a fixed number of days or hours. For workers with irregular hours, weeks must be converted into an hours-based entitlement using an accrual mechanism that reflects time actually worked.

What the employer must decide or do

Employers must:

• treat 5.6 weeks as the statutory ceiling, not a guaranteed allocation in advance
• ensure entitlement is expressed in hours, not days, for irregular workers
• avoid language suggesting irregular workers are entitled to “28 days” in the abstract

Holiday policies that refer only to “days” without conversion mechanisms create ambiguity and increase dispute risk.

What happens if you get it wrong

If an employer assumes irregular workers have no meaningful entitlement until leave is taken, or treats holiday as discretionary, this exposes the business to under-accrual claims, unlawful deduction from wages claims and retrospective recalculation liabilities covering multiple leave years.

2. When can employers lawfully apply the 12.07% accrual method?

What the law requires

For leave years beginning on or after 1 April 2024, statutory holiday entitlement for irregular hours and part-year workers accrues at a rate of 12.07% of actual hours worked in each pay period.

DEC clarification: the 12.07% method is a statutory entitlement calculation method for qualifying workers and qualifying leave years. It is not a discretionary approximation and it should not be treated as optional “best practice”.

This accrual method applies only if:

• the worker is correctly classified as irregular hours or part-year, and
• the employer’s leave year has begun on or after 1 April 2024

The method does not apply retrospectively to earlier leave years, and it does not apply to regular hours workers.

What the employer must decide or do

Employers must:

• identify their leave year start date
• confirm whether the 12.07% accrual method can lawfully be applied
• configure payroll systems to accrue entitlement per pay period based on hours worked

Where a leave year starts before 1 April 2024, employers should continue using the pre-reform approach until the next leave year begins. For reform context and implementation risk, see new employment regulations on holiday pay and working hours and new guidance simplifying holiday pay calculations.

What happens if you get it wrong

Applying the 12.07% method before the relevant leave year start date can unlawfully reduce entitlement, invalidate related pay arrangements and create backdated liability if challenged.

3. What counts as “hours worked” for entitlement accrual?

What the law requires

Entitlement accrual is based on actual hours worked and paid in the relevant pay period. This includes contracted working time, paid overtime and additional hours actually performed.

DEC clarification: “hours worked” should be interpreted as hours paid as work, which can include paid mandatory training and other paid working time, not merely clocked attendance.

It does not include weeks where no work is done and no pay is received, unpaid absences or periods where no work is performed and no pay is due.

What the employer must decide or do

Employers must:

• define clearly what counts as paid working time for accrual purposes
• ensure payroll captures hours accurately
• align accrual logic with pay data, not roster assumptions

What happens if you get it wrong

Incorrect hour capture results in systematic under-accrual or over-accrual, disputes on termination when accrued leave is reconciled and loss of confidence in payroll integrity.

4. Can employers offer more than statutory entitlement?

What the law requires

Employers may offer contractual holiday entitlement above the statutory minimum, but they cannot offer less. Where enhanced entitlement is provided, it should be clearly distinguished from statutory leave.

What the employer must decide or do

Employers should:

• separate statutory and contractual leave in policy wording
• specify how additional leave accrues for irregular workers
• avoid blending contractual enhancements into statutory calculations

What happens if you get it wrong

Blurring statutory and contractual entitlement can invalidate carry-over rules, complicate termination payments and expose employers to arguments that enhanced terms form part of statutory rights.

Section B summary: entitlement fundamentals

For irregular hours and part-year workers, statutory entitlement remains 5.6 weeks, but entitlement accrues rather than being front-loaded. The 12.07% method applies only for qualifying workers in leave years beginning on or after 1 April 2024, and accurate hour capture is essential. Contractual enhancements must be clearly separated to avoid undermining statutory compliance.

Section C: How must holiday pay be calculated for irregular hours workers?

Holiday entitlement and holiday pay are legally distinct concepts. Employers frequently conflate the two, particularly when using the 12.07% accrual method, which leads to systematic underpayment and litigation risk. This section focuses on how holiday pay must be calculated once entitlement has accrued, and where employers most often fail.

1. What must statutory holiday pay include?

What the law requires

Statutory holiday pay must reflect a worker’s normal remuneration, not merely their basic hourly rate. For workers with irregular hours, this means holiday pay should mirror what the worker would normally earn if they were working.

Depending on the individual’s pay structure, this can include:

• basic pay for hours worked
• regular overtime payments
• shift premia
• allowances that are intrinsically linked to the performance of duties

DEC clarification: not all overtime must be included. Only overtime that is sufficiently regular or intrinsically linked to the job forms part of normal remuneration. Discretionary or genuinely ad hoc overtime may be excluded, depending on the facts.

The principle is that workers should not be financially worse off for taking statutory leave. This principle continues to apply following the 2024 reforms.

For a broader explanation of how holiday pay must be calculated, see holiday pay and holiday pay on overtime.

What the employer must decide or do

Employers must:

• identify which pay elements form part of normal remuneration
• ensure those elements are reflected in holiday pay calculations
• apply consistent inclusion rules across the workforce

What happens if you get it wrong

Excluding pay elements that form part of normal remuneration can result in underpaid holiday, unlawful deduction from wages claims and retrospective liabilities covering multiple leave years.

2. When does the 52-week reference period still apply?

What the law requires

Where holiday pay is not paid using rolled-up holiday pay, employers must calculate holiday pay using an averaging method based on the worker’s previous earnings.

The standard reference period is 52 weeks of paid work. Where the worker has not worked for 52 weeks, the reference period is the number of complete weeks worked. Weeks in which no pay was received must be excluded, and the employer must look back up to a maximum of 104 weeks to identify 52 paid weeks.

This approach ensures holiday pay reflects typical earnings rather than temporary fluctuations.

What the employer must decide or do

Employers must:

• identify the correct reference period for each worker
• exclude weeks with no pay from the calculation
• ensure payroll systems can look back far enough to capture paid weeks

What happens if you get it wrong

Common errors include averaging over calendar weeks rather than paid weeks, including zero-pay weeks, or using contractual hours instead of actual earnings. These mistakes frequently lead to underpayment and are easily identifiable during payroll audits or tribunal disclosure.

3. How does holiday pay interact with the 12.07% accrual method?

What the law requires

The 12.07% figure determines how much leave accrues, not how much holiday pay is worth.

Employers must not assume that 12.07% of pay automatically satisfies holiday pay obligations or that accrual and pay calculations are interchangeable.

If an employer accrues 12.07% of hours and then pays holiday at a rate that excludes elements of normal remuneration, the holiday pay remains non-compliant.

What the employer must decide or do

Employers must:

• separate entitlement logic from pay logic
• ensure accrued hours are paid at the correct holiday rate
• audit holiday pay outputs independently of accrual calculations

What happens if you get it wrong

Blending accrual and pay calculations often leads to hidden underpayments, complex remediation exercises and reputational damage when discrepancies are uncovered.

4. What changes if rolled-up holiday pay is used?

What the law requires

Where rolled-up holiday pay is lawfully used, holiday pay is paid alongside wages rather than at the point leave is taken. However, it must be clearly itemised on the payslip, reflect normal remuneration and workers must still be allowed and encouraged to take leave.

Rolled-up holiday pay does not remove the obligation to calculate holiday pay accurately. It changes timing, not substance.

For detailed guidance on lawful implementation, see rolled-up holiday pay.

What the employer must decide or do

Employers using rolled-up holiday pay must:

• apply a clear and transparent uplift
• ensure the uplift reflects all relevant pay elements
• monitor whether workers are actually taking leave

DEC clarification: where employers fail to ensure leave is taken in practice, workers may argue that rolled-up holiday pay does not extinguish entitlement, particularly on termination.

What happens if you get it wrong

Improper use of rolled-up holiday pay can invalidate the arrangement, revive claims for unpaid holiday at the point leave should have been paid and create dual liabilities for entitlement and pay.

Section C summary: holiday pay risk controls

For irregular hours workers, entitlement accrual and holiday pay are separate legal steps. Normal remuneration principles continue to apply, the 52-week reference period remains relevant and rolled-up holiday pay must be tightly governed. Most holiday pay disputes arise not from misunderstanding entitlement, but from underestimating what holiday pay must include.

Section D: When can employers lawfully use rolled-up holiday pay?

Rolled-up holiday pay has historically been one of the most contentious aspects of UK holiday law. While previously considered unlawful, the position changed from April 2024 for a limited category of workers. Employers must now decide carefully whether rolled-up holiday pay is appropriate and, if so, how to implement it without undermining compliance.

1. Is rolled-up holiday pay now legal in the UK?

What the law requires

Rolled-up holiday pay is lawful only for irregular hours workers and part-year workers, and only for leave years beginning on or after 1 April 2024.

It remains unlawful for:

• regular hours workers
• employees with fixed weekly or monthly hours
• workers outside the statutory definitions introduced by the 2024 reforms

Where permitted, rolled-up holiday pay allows employers to pay holiday pay alongside wages instead of at the point leave is taken. This represents a change in timing, not a reduction in entitlement.

What the employer must decide or do

Employers must first confirm that:

• the worker is correctly classified as irregular hours or part-year
• the leave year start date allows use of the rolled-up mechanism

Using rolled-up holiday pay without satisfying these conditions renders the arrangement unlawful from the outset.

What happens if you get it wrong

If rolled-up holiday pay is applied to non-qualifying workers, employers may face claims that holiday pay was never lawfully paid, exposing the business to backdated claims for each period of leave that should have been paid separately.

2. What conditions must be met for rolled-up holiday pay to be compliant?

What the law requires

For rolled-up holiday pay to be compliant, employers must meet all of the following conditions:

• holiday pay must be clearly itemised on payslips
• the rolled-up amount must reflect normal remuneration
• workers must retain the right to take statutory holiday
• workers must not be discouraged from taking leave

Itemisation is not optional. Holiday pay must be shown separately from basic pay so that workers can clearly identify what they are being paid in respect of holiday.

What the employer must decide or do

Employers should:

• define the rolled-up percentage or uplift transparently
• ensure payroll systems apply the uplift consistently
• train managers not to treat holiday as “already paid” and therefore unnecessary

For additional context on lawful implementation risks, see rolled-up holiday pay.

What happens if you get it wrong

Failure to itemise holiday pay or to reflect normal remuneration can invalidate the rolled-up arrangement, allowing workers to argue that holiday pay was never properly paid.

3. Does rolled-up holiday pay remove the obligation to manage leave?

What the law requires

No. Rolled-up holiday pay does not remove the employer’s obligation to allow, encourage and record holiday leave.

Employers must still ensure that workers:

• can request holiday
• are given reasonable opportunities to take leave
• are not deterred from taking leave because holiday pay has already been received

DEC clarification: where employers fail to ensure leave is taken in practice, workers may argue that rolled-up holiday pay does not extinguish entitlement, particularly on termination when accrued leave is assessed.

What the employer must decide or do

Employers must continue to:

• operate holiday booking systems
• track leave taken
• remind workers to take holiday

What happens if you get it wrong

Employers who treat rolled-up holiday pay as a substitute for leave management risk claims that statutory leave was never made accessible, triggering carry-over and termination liabilities.

4. Is rolled-up holiday pay commercially advisable?

What the law requires

The law permits rolled-up holiday pay in limited circumstances, but it does not require employers to use it.

What the employer must decide or do

Employers should weigh:

• administrative simplicity versus compliance risk
• worker understanding of holiday rights
• audit and evidential requirements

For some employers, rolled-up holiday pay reduces payroll complexity. For others, it introduces greater litigation risk if not managed rigorously.

What happens if you get it wrong

Improperly implemented rolled-up holiday pay can create dual exposure: holiday pay claims and arguments that entitlement itself was never discharged.

Section D summary: controlled use only

Rolled-up holiday pay is now lawful for irregular hours and part-year workers, but only within strict boundaries. It must be transparently itemised, reflect normal remuneration and sit alongside active leave management. Used carefully, it can be compliant. Used casually, it creates significant risk.

Section E: How should employers manage holiday booking and refusal for irregular hours workers?

Managing holiday requests for irregular hours workers requires a balance between operational control and statutory compliance. While employers retain discretion over when leave can be taken, that discretion is constrained by Working Time Regulations requirements and wider employment law risks.

1. Can employers control when irregular hours workers take holiday?

What the law requires

Employers are entitled to control the timing of holiday, including setting rules for how and when holiday can be taken, provided those rules comply with the Working Time Regulations notice requirements.

As a general rule:

• a worker must give notice of at least twice the length of leave requested
• an employer can refuse a request by giving counter-notice at least as long as the leave requested

These rules apply equally to irregular hours workers. However, the practical application must reflect the reality of variable working patterns.

What the employer must decide or do

Employers should:

• set clear notice requirements in holiday policies
• ensure managers understand refusal rights and limits
• apply rules consistently across comparable workers

For common refusal scenarios and risk points, see employer refusing holiday requests.

What happens if you get it wrong

Unreasonable or inconsistent refusals can prevent workers from taking statutory holiday in practice. This can trigger carry-over rights and undermine rolled-up holiday pay arrangements.

2. Can employers refuse holiday to meet business needs?

What the law requires

Employers may refuse holiday requests for legitimate business reasons, such as minimum staffing requirements, peak operational periods or regulatory coverage obligations.

However, refusals must not operate in a way that makes it impossible or unreasonably difficult for workers to take their statutory holiday over the course of the leave year.

What the employer must decide or do

Employers should:

• identify peak periods in advance
• communicate blackout dates clearly
• offer alternative opportunities to take leave

Where refusals are frequent, employers should review whether staffing models or resourcing assumptions are compatible with statutory leave obligations.

What happens if you get it wrong

Systemic refusal of leave can expose employers to claims that workers were denied a reasonable opportunity to take holiday, enabling statutory carry-over and increasing termination liabilities.

3. Do employers need to actively encourage irregular hours workers to take leave?

What the law requires

Yes. Employers must do more than simply allow holiday to be booked. To prevent statutory holiday from carrying over, employers must be able to show that they:

• informed workers of their entitlement
• gave them a reasonable opportunity to take it
• actively encouraged them to do so
• warned them that leave would be lost if not taken

This obligation applies equally to irregular hours workers, even where rolled-up holiday pay is used.

What the employer must decide or do

Employers should:

• issue periodic reminders of accrued leave
• prompt managers where leave balances remain unused
• retain evidence of communications

For policy approaches designed to prevent accumulation risk, see use-it-or-lose-it holiday policies.

What happens if you get it wrong

If employers cannot evidence encouragement and warning, statutory holiday may carry forward indefinitely, creating long-tail financial exposure.

4. Are there wider discrimination risks when managing holiday requests?

What the law requires

Holiday management decisions must comply not only with the Working Time Regulations but also with equality legislation. Practices that appear neutral can amount to indirect discrimination if they disproportionately disadvantage certain groups, such as workers with caring responsibilities.

What the employer must decide or do

Employers should:

• apply holiday rules flexibly where justified
• document the rationale for refusals
• train managers on equality risks

What happens if you get it wrong

In addition to holiday pay claims, employers may face discrimination claims with uncapped compensation where holiday policies or refusals are applied inflexibly.

Section E summary: controlled discretion, not absolute power

Employers retain control over when holiday is taken, but that control is limited by statutory entitlement, carry-over rules and equality law. Active encouragement, consistent refusal practices and documented decision-making are essential to prevent holiday entitlement from becoming an unmanaged liability.

Section F: When can holiday entitlement be carried over for irregular hours workers?

Holiday carry-over is one of the highest-risk areas for employers managing irregular hours workers. The 2024 reforms did not remove historic carry-over rights derived from EU case law; instead, they codified and clarified when carry-over applies. Employers who assume unused holiday simply expires are particularly exposed.

1. What statutory holiday can be carried over and why?

What the law requires

Statutory holiday entitlement consists of two elements:

• 4 weeks derived from EU law (regulation 13)
• 1.6 weeks additional UK entitlement (regulation 13A)

The carry-over rules apply primarily to the four-week EU-derived element, although limited carry-over of the additional 1.6 weeks may also be permitted by contract or policy.

Under the current legal framework, irregular hours workers may carry over statutory holiday where they were unable to take it for legally recognised reasons.

What the employer must decide or do

Employers must distinguish between:

• statutory leave that must be allowed to carry over
• statutory leave that may be restricted by policy
• any enhanced contractual leave

Failing to separate these categories is a common cause of unlawful expiry.

What happens if you get it wrong

If employers treat all leave as expiring automatically, they risk breaching statutory carry-over rights and facing claims for unpaid holiday on termination.

2. When does sickness absence allow carry-over?

What the law requires

Where a worker is unable to take statutory holiday because of sickness absence, they are entitled to carry over up to four weeks of statutory holiday into the next leave year.

That carried-over leave must be taken within 18 months of the end of the leave year in which it accrued.

This rule applies equally to irregular hours workers and part-year workers.

For practical examples, see holiday entitlement during long-term sickness and going on holiday while on sick leave.

What the employer must decide or do

Employers must:

• track sickness-related untaken holiday separately
• monitor the 18-month time limit
• ensure workers are informed of their carry-over rights

What happens if you get it wrong

Incorrectly preventing sickness-related carry-over can lead to unlawful deduction claims and automatic success at tribunal, as the legal position is well established.

3. How does family leave affect holiday carry-over?

What the law requires

Where a worker is unable to take statutory holiday because they are on statutory family leave, including maternity, adoption or shared parental leave, they are entitled to carry over their full statutory holiday entitlement.

This applies regardless of whether the worker is regular hours, irregular hours or part-year.

What the employer must decide or do

Employers must:

• allow statutory holiday to accrue during family leave
• permit carry-over where leave cannot be taken
• ensure holiday is available on return to work

What happens if you get it wrong

Failure to allow family-leave carry-over can expose employers to discrimination claims in addition to holiday pay claims, significantly increasing financial exposure.

4. When does employer fault trigger automatic carry-over?

What the law requires

Workers are entitled to carry over up to four weeks of statutory holiday where the employer:

• failed to recognise the worker’s right to paid holiday
• did not provide a reasonable opportunity to take leave
• did not encourage the worker to take leave
• did not warn that leave would be lost if not taken

This applies even where the worker did not request leave.

What the employer must decide or do

Employers must actively manage holiday, not merely make it available. Evidence of reminders, encouragement and warnings is critical.

What happens if you get it wrong

Employer fault carry-over can result in entitlement accumulating over multiple years, often only becoming visible on termination when liabilities are at their highest.

Section F summary: carry-over is a compliance trigger

Carry-over rights are not exceptional. They are a predictable consequence of sickness, family leave and employer inaction. Employers who do not actively manage and evidence holiday compliance risk long-term accrual and significant termination exposure.

Section G: What happens to holiday entitlement when an irregular hours worker leaves?

Termination is the point at which most holiday entitlement disputes arise. For irregular hours and part-year workers, final pay calculations often expose historic errors in accrual, classification or holiday pay methodology. Employers should treat termination as a compliance stress test rather than a routine payroll exercise.

1. What holiday must be paid on termination?

What the law requires

On termination, employers must pay for all accrued but untaken statutory holiday up to the termination date. This applies regardless of the reason for termination and regardless of whether the worker is an employee or a worker.

For irregular hours workers, this requires:

• accurate accrual of entitlement up to the last day of work
• conversion of accrued hours into a monetary value
• payment at the correct holiday pay rate reflecting normal remuneration

The obligation arises automatically under the Working Time Regulations and cannot be contracted out of.

What the employer must decide or do

Employers must:

• reconcile accrued entitlement against leave taken
• verify the holiday pay rate used
• ensure final payments are made on time

For related guidance, see holiday entitlement when leaving a job and holiday pay on termination of employment.

What happens if you get it wrong

Underpayment on termination commonly leads to unlawful deduction from wages claims. These claims are procedurally simple for workers to bring and frequently succeed where calculations are inaccurate.

2. How should entitlement be calculated at the termination date?

What the law requires

For irregular hours workers, entitlement should be calculated by applying the 12.07% accrual method to hours worked up to the termination date, provided the leave year qualifies for the post-April 2024 rules.

Where the leave year does not qualify, employers must use the pre-reform accrual approach applicable to that leave year.

What the employer must decide or do

Employers must:

• confirm which leave year rules apply
• apply the correct accrual method
• avoid blending accrual approaches across leave years

DEC clarification: termination claims often proceed as a series of deductions, allowing workers to look back beyond the termination date if underpayments form part of a continuing pattern.

What happens if you get it wrong

Errors at termination can unlock review of historic holiday pay practices, significantly increasing financial exposure beyond the final payslip.

3. Can employers recover holiday taken in excess of accrual?

What the law requires

There is no automatic right to recover pay for holiday taken in excess of accrued entitlement. Recovery is lawful only if the contract expressly allows it.

What the employer must decide or do

Employers who allow holiday to be taken in advance of accrual should ensure that:

• contracts clearly permit recovery on termination
• deductions are calculated accurately
• the deduction does not reduce pay below the National Minimum Wage

What happens if you get it wrong

Unlawful deductions can themselves give rise to tribunal claims, even where the worker has taken more leave than accrued.

4. How does rolled-up holiday pay affect termination payments?

What the law requires

Where rolled-up holiday pay has been lawfully used, the employer must still assess whether all accrued entitlement has been discharged through the rolled-up payments.

If the rolled-up arrangement was defective or leave was not genuinely taken, workers may argue that entitlement remains outstanding.

What the employer must decide or do

Employers must:

• audit rolled-up payments against accrued entitlement
• verify that leave was taken in practice
• correct any shortfall on termination

What happens if you get it wrong

Rolled-up holiday pay does not protect employers from termination claims where compliance conditions were not met. In some cases, it increases scrutiny.

Section G summary: termination exposes historic risk

Final pay calculations are where holiday entitlement errors surface most often. Accurate accrual, correct holiday pay rates, lawful deductions and documented compliance are essential to avoid termination-triggered disputes and extended liability.

Section H: What records must employers keep to remain compliant?

For irregular hours workers, legal compliance depends not only on applying the correct holiday rules but on being able to evidence that those rules have been applied correctly over time. Record-keeping failures are one of the most common reasons employers lose otherwise defensible holiday pay claims.

1. What holiday records are employers legally required to keep?

What the law requires

There is no prescribed statutory format for holiday records. However, employers must be able to demonstrate compliance with the Working Time Regulations 1998. In practice, this requires accurate and accessible records showing:

• hours worked in each pay period
• holiday entitlement accrued
• holiday taken
• holiday pay paid
• the rate at which holiday pay was calculated
• communications encouraging workers to take leave

Where rolled-up holiday pay is used, employers must also retain payslips clearly itemising holiday pay separately from wages and evidence that workers continued to take leave.

What the employer must decide or do

Employers must decide:

• which systems hold authoritative holiday data
• how long records will be retained
• how payroll, HR and time-recording systems reconcile

Fragmented or inconsistent records materially weaken an employer’s position in any dispute.

What happens if you get it wrong

Where records are missing or unclear, tribunals often draw adverse inferences against employers. Even correct calculations can be undermined if they cannot be evidenced.

2. Should employers audit holiday entitlement for irregular hours workers?

What the law requires

There is no express statutory audit requirement. However, employers are expected to take reasonable steps to ensure ongoing compliance, particularly where working patterns are complex.

What the employer must decide or do

Employers should conduct periodic audits to:

• review worker classifications
• test accrual calculations
• verify holiday pay outputs
• check carry-over handling

Audits should be documented and followed by corrective action where issues are identified.

What happens if you get it wrong

Failure to audit allows small errors to accumulate over time, often becoming visible only on termination when liabilities are highest.

3. How should employers evidence encouragement to take leave?

What the law requires

To prevent statutory holiday from carrying over due to employer fault, employers must be able to show that they actively encouraged workers to take leave and warned them of the risk of losing entitlement.

What the employer must decide or do

Employers should implement:

• periodic leave balance reminders
• end-of-year warnings
• manager prompts where leave remains untaken

Communications should be retained as evidence.

What happens if you get it wrong

In the absence of evidence, statutory holiday may carry over indefinitely, creating significant long-term exposure.

Section H summary: evidence underpins compliance

Correct holiday calculations alone are not enough. Employers must maintain coherent records, audit regularly and evidence active leave management to defend holiday entitlement decisions effectively.

Section I: What are the most common employer mistakes and grey areas?

Most disputes about holiday entitlement for irregular hours workers arise from a small number of recurring failures. These failures are rarely intentional. They are usually caused by misclassification, payroll shortcuts, poor documentation or confusion about the interaction between entitlement accrual and holiday pay. Employers who understand these patterns can reduce dispute risk significantly.

1. Misclassifying workers at the outset

What goes wrong

Employers often assume that variability in hours automatically means a worker is “irregular hours”. In practice, employers may classify workers based on operational reality rather than contractual requirements, or they may fail to revisit classification as working patterns evolve.

Why this creates risk

Misclassification undermines the legality of:

• entitlement accrual methods
• rolled-up holiday pay arrangements
• termination calculations

How disputes arise

Misclassification disputes frequently emerge on termination, when accrued entitlement is reconciled and the worker challenges final pay calculations. They also surface during payroll audits or after Acas early conciliation is triggered by perceived underpayment.

2. Applying the 12.07% method too early or too widely

What goes wrong

Employers sometimes apply the 12.07% method from 1 April 2024 regardless of the leave year start date, or they apply it to all variable-hours workers for administrative convenience. Payroll software defaults can also lead to incorrect implementation.

Why this creates risk

Using the 12.07% method outside the scope of the reforms can result in under-accrual of statutory leave and unlawful holiday practices.

How disputes arise

Errors are often discovered at year-end reconciliation, on termination or when workers compare payslips and accrued leave records.

3. Confusing entitlement accrual with holiday pay

What goes wrong

Employers frequently treat the 12.07% method as both an entitlement and pay mechanism, assuming that paying 12.07% of wages satisfies holiday pay obligations.

Why this creates risk

Entitlement accrual and holiday pay must be treated as separate legal steps. Holiday pay must reflect normal remuneration and may require a 52-week averaging method.

How disputes arise

Underpayments often become apparent over time, particularly for workers with regular overtime or allowances. Claims can escalate quickly once advisers identify historic shortfalls.

4. Poor leave management leading to unlawful carry-over

What goes wrong

Employers often rely on passive systems where workers must manage their own leave without reminders or warnings. They may assume unused leave simply expires at year-end.

Why this creates risk

If employers do not provide a reasonable opportunity to take leave, encourage leave and warn of loss, statutory leave may carry forward and accumulate over multiple years.

How disputes arise

Accumulated leave liabilities frequently surface on termination, during sickness absence or following family leave periods.

5. Inadequate documentation and record-keeping

What goes wrong

Employers may lack coherent records of hours worked, entitlement accrued or holiday taken. Data may be inconsistent across payroll, HR and time-recording systems.

Why this creates risk

In disputes, the employer’s inability to evidence compliance often determines the outcome, even where calculations were likely correct.

How disputes arise

Record weaknesses are typically exposed during tribunal disclosure or when advisers request historic pay data. Employers then face settlement pressure due to evidential vulnerability.

6. Treating termination calculations as routine payroll

What goes wrong

Employers often rely on automated termination calculations and fail to audit final holiday pay. Some attempt to recover over-taken holiday without contractual authority.

Why this creates risk

Termination is where historic errors crystallise and where workers are most likely to challenge calculations. Unlawful deductions can trigger tribunal claims even where the worker has taken more leave than accrued.

How disputes arise

Most claims begin with a final payslip challenge, followed by Acas early conciliation and a widening review of historic holiday practices.

Section I summary: dispute prevention focuses on repeat failure points

Holiday entitlement disputes for irregular hours workers most often arise from misclassification, premature use of the 12.07% method, underpayment of holiday pay, unmanaged carry-over, weak records and termination errors. Employers who document classification decisions, audit payroll systems and actively manage leave reduce both legal exposure and operational disruption.

Section J: FAQs – Holiday Entitlement for Irregular Hours Workers

This section answers the questions employers most frequently ask when managing holiday entitlement for irregular hours and part-year workers. The questions are framed deliberately in plain English to support internal decision-making, compliance checks and AI-driven search retrieval.

1. Do irregular hours workers get 28 days’ holiday in the UK?

No. Irregular hours workers are entitled to 5.6 weeks of statutory holiday, not a fixed number of days.

The “28 days” figure applies only to a full-time worker who works five fixed days per week. For irregular hours workers, entitlement must be calculated and recorded in hours, based on time actually worked.

Employers who express entitlement in days rather than hours risk under-accrual and disputes, particularly on termination.

2. When can employers legally use the 12.07% accrual method?

Employers can use the 12.07% accrual method only where:

• the worker is correctly classified as an irregular hours or part-year worker, and
• the employer’s leave year begins on or after 1 April 2024

The method cannot be applied retrospectively to earlier leave years and cannot be used for regular hours workers.

Applying the method outside these conditions is unlawful and can invalidate holiday calculations.

3. Does the 12.07% method calculate holiday pay or holiday entitlement?

It calculates holiday entitlement, not holiday pay.

The 12.07% figure determines how much leave accrues based on hours worked. Holiday pay must still be calculated separately in line with normal remuneration rules.

Confusing entitlement accrual with holiday pay is a common cause of underpayment claims.

4. Can employers use rolled-up holiday pay for irregular hours workers?

Yes, but only where strict conditions are met.

Rolled-up holiday pay is lawful only for irregular hours and part-year workers and only for leave years beginning on or after 1 April 2024. Holiday pay must:

• be clearly itemised on payslips
• reflect normal remuneration
• not discourage workers from taking leave

Employers must still manage and record holiday leave, even where rolled-up holiday pay is used.

5. Do irregular hours workers accrue holiday during sickness or family leave?

Yes.

Holiday entitlement continues to accrue during sickness absence and statutory family leave, including maternity, adoption and shared parental leave.

If holiday cannot be taken because of sickness or family leave, statutory carry-over rules apply.

6. Can irregular hours workers carry over unused holiday?

Only in specific circumstances.

Statutory holiday can be carried over where the worker:

• was unable to take leave due to sickness
• was on statutory family leave
• was not given a reasonable opportunity to take leave
• was not warned that leave would be lost

Carry-over is not automatic and depends on the reason leave was untaken.

7. Can employers refuse holiday requests from irregular hours workers?

Yes, provided refusal complies with:

• Working Time Regulations notice rules
• contractual holiday policies
• equality and non-discrimination law

Employers must not refuse leave in a way that prevents workers from taking their statutory entitlement in practice.

8. What happens if an irregular hours worker leaves employment?

On termination, employers must pay for all accrued but untaken statutory holiday.

This requires accurate accrual calculations up to the termination date and payment at the correct holiday pay rate.

9. Can employers recover holiday pay if too much leave was taken?

Only if the contract expressly allows recovery.

There is no automatic right to deduct pay for over-taken holiday. Without contractual authority, deductions may be unlawful.

10. What is the biggest compliance risk for employers?

Misclassification.

If a worker is wrongly classified as irregular hours or part-year, every downstream decision—accrual method, rolled-up holiday pay and termination calculations—may be legally unsafe.

Section J summary: clarity reduces disputes

Most employer disputes arise from misunderstandings about entitlement, timing and classification. Clear documentation, correct application of the 12.07% method and separation of entitlement from pay are critical to defensible compliance.

Section K: Conclusion – compliance priorities for employers

Holiday entitlement for irregular hours workers is no longer an area where employers can rely on legacy practices, informal manager discretion or payroll defaults. The 2024 reforms clarified how entitlement accrues and when rolled-up holiday pay may be used, but they also increased scrutiny on classification, record-keeping and practical access to leave.

From a compliance perspective, the starting point for employers is not the 12.07% figure. It is correct worker classification. Whether a worker is genuinely irregular hours or part-year is the gateway issue. If that assessment is wrong, entitlement accrual, holiday pay calculations, rolled-up holiday pay and termination payments may all be legally defective, regardless of how carefully they are administered.

Employers must also treat entitlement accrual and holiday pay as separate legal steps. The 12.07% method determines how much leave accrues. It does not determine how much holiday pay is worth. Holiday pay must still reflect normal remuneration, and the 52-week reference period remains relevant where rolled-up holiday pay is not used. Conflating these steps is one of the most common causes of underpayment claims.

Where rolled-up holiday pay is adopted, it should be treated as a regulated compliance mechanism, not a payroll shortcut. Employers must ensure eligibility, transparent payslip itemisation, accurate pay calculations and, critically, that workers continue to take leave in practice. Failure to manage leave alongside rolled-up pay can revive entitlement on termination and undermine the arrangement entirely.

Active holiday management and evidence are now central to risk control. Employers must be able to show that workers were informed of their entitlement, encouraged to take leave and warned about loss. Without that evidence, statutory holiday may carry over indefinitely, creating long-term financial exposure that often only surfaces on exit.

Finally, employers should treat termination as a compliance stress test. Most holiday entitlement disputes arise at the point of final pay, when accrued entitlement is reconciled and historic errors become visible. Accurate records, audited calculations and lawful deductions are essential to avoid termination-triggered claims.

In commercial terms, the cost of getting holiday entitlement wrong for irregular hours workers extends well beyond unpaid leave. It includes management time, legal fees, reputational risk and, in some cases, multi-year backdated liability. Employers who invest in clear classification, robust systems and documented decision-making are far better positioned to defend their practices if challenged.

Section L: Glossary

Section M: Useful Links