This guidance explains how to calculate statutory holiday pay for workers without fixed hours or fixed rates of pay. It is for use by workers or employers.
Calculating holiday pay:
Holiday pay is based on the principle that a worker should not suffer financially for taking a holiday.
In simple terms, almost all workers, except those who are genuinely self-employed, are legally entitled to 20 days plus 8 days of Bank Holiday paid holidays per year. This entitlement is derived from the Working Time Regulations 1998.
The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working.
The majority of the UK’s workforce are full-time workers on fixed hours and fixed pay. For these workers, typically on a fixed monthly salary, if they take a week’s holiday, they will receive the same pay at the end of the month as they normally receive.
The situation becomes more complicated when a worker does not work fixed or regular hours and so does not receive the same amount of pay each week, month or other pay period. In these circumstances an employer should normally look back at a worker’s previous 52 paid weeks (known as the holiday pay reference period) to calculate what that worker should be paid for a week’s leave.
To simplify, every temporary worker accrue 12.07% on every hour they work.
For example, if the worker has worked 129 hours in total since joining our agency the calculation will look like this:
That means that the worker accrued 1.2 days of holidays.
Calculating hourly pay:
Majority of our employees don’t work set hours, therefore we use a variable rate of pay. When use of an average hourly rate of pay, the weekly rate of pay can be calculated by multiplying the hours worked in a week by the average hourly rate of pay, as shown by the following formula:
(Monthly pay ÷ hours worked in month) = average hourly pay
Average hourly pay x hours worked in week = weekly pay
In a month a worker earns £1,250 and works 130 hours:
25 hours in week 1
20 hours in week 2
35 hours in week 3
35 hours in week 4
15 hours in week 5 (only part of the week falls in the month)
Average hourly pay = £1,250 ÷ 130 = £9.62