UK Holiday Pay Calculation (2026/27): Overtime + Commission Inclusion
UK holiday pay calculation 2026/27: Working Time Regulations 5.6 weeks statutory minimum, Bear Scotland v Fulton overtime inclusion, Harpur Trust v Brazel pro-rating ban for term-time workers, 52-week reference period, 12.07% rolled-up holiday pay legality for irregular workers (April 2024 reform), and how to spot underpayment.
Statutory entitlement basics
- 5.6 weeks per year for full-time workers (28 days for 5-day workers), pro-rated for part-time.
- Bank holidays can be included in or excluded from the 5.6 weeks - depends on contract. There\'s no statutory right to bank holidays specifically.
- From day one - accrual begins day one of employment.
- Leave year - employer can set (1 Jan, 1 Apr, 1 Sep common). If not specified, defaults to start date.
- Carry-over - statutory leave generally cannot carry over; exceptions for sickness + parental leave.
- Pay in lieu - statutory leave cannot be replaced with payment except on termination.
What must be included in holiday pay
The historic underpayment trap: many employers paid basic salary only during holidays + ignored regular overtime, commission, shift premiums. Courts have progressively widened the inclusion requirement.
| Pay component | Include? | Authority |
|---|---|---|
| Basic salary | Yes | Always - core obligation |
| Regular overtime | Yes | Bear Scotland v Fulton [2014] - voluntary + non-guaranteed overtime if "normally paid" |
| Commission | Yes | Lock v British Gas [2014] - commission "intrinsically linked to performance" |
| Standby + on-call allowances | Yes | Williams v British Airways [2011] - where part of normal remuneration |
| Shift premiums + allowances | Yes | Dudley MBC v Willetts [2017] - regular shift premiums |
| Bonuses (performance + non-contractual) | Generally NO | Only if "intrinsically linked" + regular - one-off bonuses excluded |
| Expense reimbursements | No | Not part of remuneration for work |
| Statutory leave payments (SSP, SMP) | No | Statutory payments, not remuneration for work |
52-week reference period (variable pay workers)
For workers with variable pay (overtime, commission, shift premiums, irregular hours), holiday pay is calculated using the 52-week reference period (extended from 12 weeks in April 2020). Method:
- Identify the 52 worked weeks immediately before holiday is taken.
- EXCLUDE weeks where no pay was received (sickness, unpaid leave, no work) - look back further to make up 52 paid weeks (up to 104 weeks back).
- Sum total pay across those 52 weeks (including all qualifying components).
- Divide by 52 to get average weekly pay.
- For each week of leave, pay the average weekly pay.
The 52-week period reduces "seasonal" gaming where employers historically used 12-week periods strategically timed to avoid peak commission periods. For commission-heavy roles + roles with seasonal overtime, this typically increases holiday pay 5-15%.
Rolled-up holiday pay (April 2024 reform)
From April 2024, for irregular-hours + part-year workers, employers can legally use the 12.07% rolled-up holiday pay method - including holiday pay in the hourly rate rather than paying when leave is taken. Conditions:
- Clear separate identification on payslips of the 12.07% holiday pay element.
- Holiday entitlement still notionally accrued (12.07% × hours worked in each pay period).
- Worker can still take leave (unpaid in that week if rolled-up was applied throughout).
- Original hourly rate must not have been reduced to fund the 12.07% uplift (would be unlawful).
For workers with regular fixed hours + fixed pay, rolled-up holiday pay remains unlawful - holiday pay must be paid in the leave period itself. Misapplication of rolled-up pay to fixed-hour workers is a common employer error + a strong unlawful-deductions claim.
Related guides
- UK Employment Contract Red Flags 2026/27 - holiday clauses to negotiate.
- UK Probation Period Rights 2026/27 - holiday accrual during probation.
- UK Notice Period Rules 2026/27 - accrued holiday payment on termination.
- UK Statutory Sick Pay 2026/27 - holiday accrual during sickness.
- UK SMP 2026/27 - holiday accrues during maternity leave.
Frequently asked questions
How much holiday am I entitled to?
Statutory minimum: 5.6 weeks per year for full-time workers (28 days for 5-days-a-week), INCLUDING bank holidays - the employer can include them in the 28 days or give them separately. Pro-rata for part-time. Working Time Regulations 1998. Some employers offer more contractually (typical professional contracts: 25 days + 8 bank holidays = 33 days). Annual leave accrues from day one of employment; statutory cannot be carried over to next leave year except for parental leave, sickness, or certain pandemic-related exceptions.
What's the correct holiday pay rate?
For workers with fixed hours + fixed pay: simply your normal weekly pay. For variable pay workers: the "52-week reference period" applies (extended from 12 weeks in April 2020). Take the AVERAGE weekly earnings over the last 52 worked weeks (excluding weeks not worked). For new starters, use the weeks worked so far. The reference period MUST exclude weeks where you received no pay. Watch for: overtime, commission, shift premiums - if regularly paid, MUST be included.
What's rolled-up holiday pay?
A practice where holiday pay is included in the hourly rate (typically as 12.07% top-up) rather than paid when leave is taken. Was previously unlawful (Robinson-Steele [2006] ECJ). From 1 April 2024 the Working Time (Amendment) Regulations 2023 made rolled-up holiday pay LEGAL for irregular-hours workers + part-year workers, provided: (a) the 12.07% uplift is clearly identified on payslips, (b) holiday is still notionally accrued + recorded, (c) the worker can still take leave (just doesn't get paid extra when they do). For workers with regular hours + pay, rolled-up holiday pay remains unlawful - holiday pay must be paid in the leave period.
What was the Harpur Trust v Brazel decision?
Supreme Court 2022 case about term-time workers (e.g. school teaching assistants who only work during term but are employed year-round). The court ruled that they're entitled to 5.6 weeks holiday at their average weekly pay - NOT pro-rated by weeks worked. This boosts holiday pay significantly for part-year workers. The April 2024 reforms partly addressed this by formally introducing the 12.07% accrual method for irregular + part-year workers from April 2024 leave year onwards - but Harpur Trust still applies to leave years starting before April 2024 + to disputes about back-pay. Practical: school + university support staff often have material historic underpayment claims.
Can my employer make me take holiday at specific times?
Yes, under Regulation 15 WTR 1998 - the employer can require you to take leave by giving notice equal to twice the leave period (e.g. 10 days notice for 5 days enforced leave). Also can prohibit leave at certain times by giving notice equal to the leave period. Common use: enforced Christmas closure days, end-of-leave-year flush. Cannot be used in a way that prevents you taking your full statutory entitlement.
Can I carry over unused holiday?
Statutory entitlement (the 5.6 weeks) generally cannot be carried over - "use it or lose it" by end of leave year. EXCEPTIONS: (a) sickness prevented you from taking it - carry over up to 15 months (Pereda + King v Sash Window), (b) parental leave prevented you, (c) pandemic-related carry-over (special COVID rules ending April 2026). Contractual leave above the statutory minimum: carry-over depends on the contract / staff handbook. Always check what your leave year run is - common ones: 1 Jan - 31 Dec, 1 Apr - 31 Mar, 1 Sep - 31 Aug.
I think I've been underpaid holiday - what can I do?
Unlawful deductions claim under Section 23 ERA 1996. You can claim up to 2 years of historic underpayment (Deduction from Wages (Limitation) Regulations 2014). To preserve a "series of deductions" claim, the underpayments must not have a gap of more than 3 months. Process: (1) Internal grievance first - many employers settle once challenged. (2) ACAS Early Conciliation (free) - 6 weeks. (3) Employment Tribunal claim within 3 months less 1 day of last deduction. Calculations: build a spreadsheet of weeks worked + correct pay (including overtime + commission averages) vs what was paid. Underpayment per leave week × leave taken = claim value.
What if I don't have regular hours?
Two approaches from April 2024: (1) 12.07% accrual method (default for irregular-hours + part-year workers) - holiday entitlement accrues at 12.07% of hours worked in each pay period. (2) Pay calculation via the 52-week reference period - average weekly earnings from the last 52 worked weeks. Employers can use either method but must be consistent. The 12.07% comes from 5.6 weeks ÷ 46.4 weeks (52 weeks minus 5.6 weeks of holiday) = 12.0689... → 12.07%. For zero-hours workers + casual staff, the 12.07% accrual is now the standard.