Holiday pay: top tips!

We’ve listed the top five things you need to know about holiday pay in 2024:

What Needs to Be Included: From January 2024, statutory holiday (4 weeks of holiday pay each year) must be paid at ‘normal pay’ which should include: 

• Payments (like commission) which are intrinsically linked to job performance.
• Payments related to status, like length of service, seniority, or professional qualifications.
• Other payments (like overtime) made regularly in the past 5

Statutory vs. Additional Holiday:

Statutory holiday is 4 weeks a year. The UK minimum holiday entitlement is 5.6 weeks per year. The extra 1.6 weeks and any additional days offered by your business can be paid at basic rate. There are slightly different rules for irregular hours and part-year workers.

Fixed vs. Variable Pay:

If an employee has regular hours and fixed pay, holiday pay should be the same as what they normally earn.  For variable hours or pay, holiday pay should be calculated based on an average of earnings over the past 52 weeks. 

For irregular hours or part-year workers, employers can use rolled-up holiday pay again. 

Irregular Hours/Part-Year Workers:

These workers get holiday pay based on 'normal pay' rates for the full 5.6 weeks – either through rolled-up holiday pay or an equivalent calculation. Holiday pay is treated as a single pot and is not split into 4 weeks statutory and 1.6 additional weeks.

No payment in lieu of holiday during employment:

Employees can't be paid instead of taking their holiday during employment. They must take the actual holiday time. This means that only when an employee leaves a job can they be paid in lieu of any unused holiday.