Rolled-Up Holiday Pay: The 2024 Rule Change Explained
From 1 April 2024, rolled-up holiday pay became lawful for irregular hours and part-year workers in the UK. This guide explains who qualifies, how to calculate it, and what rights workers still hold.
What is rolled-up holiday pay?
Rolled-up holiday pay is a method of paying holiday entitlement as part of every payslip, rather than separately when a worker takes annual leave. A percentage of gross pay — representing the accrued holiday entitlement — is added to wages in each pay period.
In practice, instead of receiving a week's holiday pay when they take a week off, a worker on rolled-up holiday pay receives a small uplift on every payslip throughout the year. While administratively convenient, this arrangement was historically unlawful in the UK — until the law changed in April 2024.
Why was it previously unlawful?
The Working Time Regulations 1998, implementing the EU Working Time Directive, require that workers receive their statutory leave entitlement as actual paid time off. Established case law confirmed that rolled-up holiday pay contravenes this requirement.
Robinson-Steele v RD Retail Services [2006]: The European Court of Justice ruled that rolled-up holiday pay was unlawful. Paying holiday pay alongside normal wages — rather than when leave is actually taken — discourages workers from taking rest periods. Workers may not set aside the money, and may effectively work without proper breaks, harming their health and safety.
Following Robinson-Steele, UK employers who used rolled-up pay arrangements risked employment tribunal claims, even if the total pay received exceeded the statutory minimum.
What changed in April 2024?
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 came into force on 1 April 2024, making rolled-up holiday pay lawful — but only for two categories of worker:
- Irregular hours workers — workers whose paid hours vary wholly or mostly from one pay period to the next under the terms of their contract. This covers zero-hours contract workers, casual workers, and agency workers without fixed weekly hours.
- Part-year workers — workers employed under a contract that spans the full year, but who are only required to work for part of it (for example, term-time school staff or seasonal workers with year-round contracts).
Still unlawful for fixed-hours workers. Rolled-up holiday pay remains unlawful for regular full-time and part-time employees with fixed weekly hours. For those workers, holiday pay must continue to be calculated on the 52-week average reference period and paid when leave is actually taken.
Harpur Trust v Brazel: the context
To understand why the 2024 change matters, it helps to know the preceding legal landscape. In Harpur Trust v Brazel [2022], the Supreme Court confirmed that part-year workers with permanent contracts are entitled to the full statutory 5.6 weeks of paid leave — not a pro-rated 12.07% fraction of the weeks they actually work.
This created a complex situation for employers of part-year staff: the simple 12.07% method was no longer lawful for workers with continuing contracts, yet calculating holiday pay on a 52-week average for casual workers with unpredictable patterns was administratively burdensome.
The 2024 regulations directly addressed this by providing a clear, lawful route for employers to use rolled-up holiday pay at 12.07% for irregular hours and part-year workers. Crucially, the underlying right to 5.6 weeks' leave was not removed — workers can still request and take that time off.
How to calculate rolled-up holiday pay
The rate is derived from the statutory leave entitlement of 5.6 weeks out of a 52-week year:
5.6 ÷ (52 − 5.6) = 5.6 ÷ 46.4 = 12.07%
Employers multiply a worker's gross earnings in the pay period by 12.07% and pay that amount as rolled-up holiday pay, shown as a separate line on the payslip.
Worked example
- Worker earns £800 in a given week
- Rolled-up holiday pay: £800 × 12.07% = £96.56
- Total payslip: £800 + £96.56 = £896.56
If an employer provides enhanced contractual holiday beyond the statutory 5.6 weeks — for example, 30 days instead of 28 — the rolled-up rate would need to be higher to reflect the additional entitlement.
Payslip requirement: Rolled-up holiday pay must be itemised separately on every payslip. A single combined figure is not sufficient — workers must be able to see exactly how much holiday pay they have received.
Your rights as a worker
Receiving rolled-up holiday pay does not reduce your entitlement to actual rest. Your key rights remain:
- Right to time off: You are still entitled to request and take 5.6 weeks of annual leave each year. Rolling up the pay does not extinguish the leave itself.
- Employer cannot refuse leave: An employer cannot deny your request for time off on the grounds that you have already received your holiday pay through rolled-up payments.
- No financial detriment: You should not be financially worse off than if holiday pay had been paid in the traditional way. The 12.07% uplift is calibrated to cover your full statutory entitlement.
- Keep your payslips: Retain copies of all payslips to track the holiday pay you have accrued throughout the year. This protects you if a dispute arises.
Is rolled-up holiday pay compulsory for employers?
No. The 2024 regulations make rolled-up holiday pay a lawful option for eligible workers — not a requirement. Employers can still calculate and pay holiday pay in the traditional way: working out average pay over a 52-week reference period and paying it when the worker actually takes leave.
Many employers of irregular hours workers choose the rolled-up method because it simplifies payroll administration and removes the need to track a shifting 52-week average, particularly when a worker's pay varies significantly week to week.
Calculate your irregular hours holiday pay
Use our free calculator to work out holiday entitlement for irregular hours and part-year workers.
Frequently Asked Questions
Is rolled-up holiday pay legal in the UK?
Yes, from 1 April 2024 it is legal for irregular hours workers and part-year workers under the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023. It remains unlawful for regular full-time or part-time workers with fixed hours.
What is the 12.07% rate for rolled-up holiday pay?
12.07% represents the proportion of statutory annual leave (5.6 weeks) to the total working year (46.4 weeks). Employers add 12.07% of a worker's gross earnings in each pay period as holiday pay.
Do irregular hours workers still have the right to take time off?
Yes. Rolled-up holiday pay does not remove the right to take actual time off. Workers can still request and take their statutory 5.6 weeks of leave each year.
Who counts as an irregular hours worker?
An irregular hours worker is someone whose paid hours vary wholly or mostly in each pay period under their contract. This includes zero-hours contract workers, casual workers, and agency workers without fixed weekly hours.
Must rolled-up holiday pay be shown separately on payslips?
Yes. Employers must itemise rolled-up holiday pay separately on the payslip so workers can clearly see what holiday pay they have received.