| Key Takeaway | Detail |
|---|---|
| New recording obligations from April 2026 | Under the Employment Rights Act 1996 (as amended), employers must keep accurate records of all holiday entitlement and pay calculations. |
| Rolled-up holiday pay is now permitted in limited cases | The Working Time Regulations 1998 (amended 2024) allow rolled-up holiday pay for irregular hours workers and part-year workers only. |
| Holiday pay must reflect regular payments | Following the Supreme Court decision in Harpur Trust v Brazel [2022], holiday pay for irregular workers must include regular overtime, commission, and bonuses. |
| Underpayment claims carry a two-year backstop | You can claim underpaid holiday going back up to two years under the Employment Rights Act 1996, Section 23. |
| Employment tribunal claims are free to bring | There is no fee to submit a claim to an Employment Tribunal for unlawful deduction from wages. |
Holiday pay sounds straightforward. You take time off work, and your employer pays you for it. Yet in practice, holiday pay disputes are among the most common employment law claims heard by UK tribunals. The rules changed again in April 2024, and further clarifications followed in 2026. If you are unsure whether you have been paid correctly, this guide explains what the law actually requires.
At Wolf Law, we advise workers across Liverpool and the North West on employment rights every day. Holiday pay errors are common, often accidental, and almost always recoverable.
What the Law Says About Holiday Pay
UK workers are entitled to at least 5.6 weeks of paid annual leave per year under the Working Time Regulations 1998. For most full-time workers, that means 28 days per year. Part-time workers receive a pro-rata equivalent.
The Basic Rule
Holiday pay must reflect your normal remuneration. That means it cannot simply be your basic hourly rate if your normal working pattern includes regular overtime, commission, or allowances. This principle was confirmed by the Employment Appeal Tribunal in Bear Scotland Ltd v Fulton [2014] and reinforced repeatedly since.
Many employers still calculate holiday pay using basic pay only. This is almost certainly unlawful if you regularly work overtime or earn commission as a standard part of your job.
Changes for Irregular Hours Workers
Since April 2024, workers with irregular hours or part-year contracts have been treated differently. These workers now accrue holiday at a rate of 12.07% of the hours they work in each pay period.
Rolled-Up Holiday Pay
The law now permits rolled-up holiday pay for irregular hours workers and part-year workers. This means an employer can add a 12.07% uplift to each payment rather than paying holiday separately. However, this only applies to these specific categories of worker. If you are a regular full-time or part-time employee, rolled-up holiday pay is still unlawful.
One client came to us after her employer began paying rolled-up holiday across the entire workforce following the 2024 changes. She worked standard hours every week. The employer had misread the legislation. We helped her recover three months of underpayments.
What Counts as Holiday Pay
The correct calculation of holiday pay must include any payments that are intrinsically linked to the performance of your duties. This includes the following types of payment.
Overtime
Regular guaranteed overtime must be included in holiday pay calculations. Non-guaranteed overtime (where you are required to work it if asked) is also included. Only truly voluntary overtime, which you can decline without consequence, falls outside the calculation.
Commission and Bonuses
If you regularly earn commission or performance bonuses as a core part of your role, these must be reflected in your holiday pay. The method involves averaging relevant pay over a 52-week reference period, excluding any weeks where no pay was earned.
You can read the official guidance on calculating holiday pay at GOV.UK – Holiday entitlement and pay.
How to Make a Holiday Pay Claim
If you believe your employer has underpaid your holiday, you have several options. You can raise the matter informally first. Most reputable employers will correct a genuine error without the need for formal action.
Formal Grievance
If informal discussion fails, raise a formal written grievance. Your employer must respond within a reasonable timeframe and follow their grievance procedure. Keep copies of all correspondence. You may find the ACAS guidance on holiday pay useful at this stage.
Employment Tribunal Claim
You can bring a claim for unlawful deduction from wages at an Employment Tribunal. Before doing so, you must notify ACAS and undertake Early Conciliation. You have three months less one day from the date of the last underpayment to submit your claim. Our solicitors at Wolf Law can guide you through the process from start to finish.
The Law Society maintains a Find a Solicitor tool if you require independent legal advice in a different region.
Two-Year Backstop Rule
You can claim underpaid holiday going back up to two years in most cases. However, this is subject to the “series of deductions” rule: your claims must form a continuous series without a gap of more than three months between underpayments. If there is a gap, the tribunal may only award from the most recent period. See Employment Rights Act 1996, Part II for the statutory basis.
Act quickly. The sooner you take advice, the longer the period you can potentially recover.
Frequently Asked Questions
Does holiday pay include overtime?
Yes, in most cases. If you regularly work overtime as a normal part of your role, it must be included in your holiday pay calculation. Voluntary overtime that you can freely decline may be excluded, but this is assessed on a case-by-case basis.
My employer pays basic rate for holidays. Is that legal?
Not necessarily. If you regularly earn more than your basic rate through overtime, commission, or bonuses, paying only basic rate for holidays is likely unlawful. You should seek legal advice about recovering the difference.
How far back can I claim for holiday pay underpayments?
You can generally claim up to two years of underpayments, provided the underpayments form a continuous series with no gap of more than three months between them. Time limits apply, so contact a solicitor promptly.
I am a zero-hours worker. Do I get holiday pay?
Yes. Zero-hours workers are legally entitled to paid annual leave. From April 2024, zero-hours workers accrue holiday at 12.07% of hours worked. This holiday pay must be paid when you take leave, or via rolled-up holiday pay added to each payment.
What is rolled-up holiday pay?
Rolled-up holiday pay is where your employer adds a 12.07% uplift to your wages instead of paying you separately when you take leave. It is only lawful for irregular hours workers and part-year workers since April 2024. It is not lawful for regular workers with fixed hours.
Can I bring a holiday pay claim while still employed?
Yes. You do not have to resign before bringing a claim for unlawful deduction from wages. Many workers successfully recover underpaid holiday while remaining in their current employment.
What should I do if my employer ignores my grievance?
Contact ACAS to start Early Conciliation, then submit a claim to the Employment Tribunal. You have three months less one day from the last underpayment. Wolf Law’s no win no fee solicitors can represent you throughout the process.
This article is intended for informational purposes only and does not constitute legal advice. For specific advice relating to your circumstances, please contact Wolf Law directly to arrange a consultation with one of our qualified solicitors.
