Holiday Pay for Irregular Hours Workers: 52-Week Calculation

Workers with irregular hours, variable shifts, or zero-hours contracts have the same right to paid holiday as full-time employees. The challenge is calculating what they should be paid.

Who Are Irregular Hours Workers?

Irregular hours workers are those whose hours vary from week to week with no fixed pattern.

Examples:

• Zero-hours contract workers
• Relief workers who cover shifts as needed
• Seasonal workers with varying hours
• Agency workers on variable assignments
• Workers who pick up shifts as available

Not irregular:

• Part-time workers with consistent hours (e.g., every Tuesday and Wednesday)
• Full-time workers with predictable patterns

The 52-Week Reference Period

The Law

Since 2020, holiday pay must be calculated using a 52-week reference period for workers with no normal working hours.

Previous law: 12-week reference period (caused significant underpayment issues).

How It Works

Formula:

Total earnings in last 52 paid weeks ÷ 52 = Average weekly pay

Then multiply by the number of weeks' holiday being taken.

Which 52 Weeks?

Start from the last complete pay period before the holiday.

Count back up to 52 weeks where the worker received pay.

Skip Unpaid Weeks

If there are weeks with no pay (e.g., no shifts worked, unpaid leave), skip those weeks and go back further.

Maximum lookback: 104 weeks.

If they still haven't worked 52 paid weeks within 104 weeks, use however many paid weeks exist.

Step-by-Step Calculation

Step 1: Identify the Reference Period

Worker is taking holiday starting Monday 10 March 2025.

Last complete pay period: Week ending 7 March 2025.

Reference period: Count back 52 paid weeks from that point.

Step 2: Gather Earnings Data

List all weeks where the worker received pay.

Include:

• Basic pay
• Overtime
• Commission
• Bonuses
• Shift allowances
• Any other regular payments

Exclude:

• Expenses reimbursements
• Benefits in kind
• One-off exceptional payments unrelated to performance

Step 3: Total the Earnings

Add up gross pay from all 52 paid weeks.

Example: Total earnings over 52 paid weeks = £19,240

Step 4: Calculate Average Weekly Pay

£19,240 ÷ 52 = £370 per week

This is the holiday pay rate for each week of holiday taken.

Step 5: Calculate Holiday Pay

If taking 1 week of holiday:

1 week × £370 = £370 holiday pay

If taking 2 days (in a 5-day working week):

£370 ÷ 5 × 2 = £148 holiday pay

Worked Example: Zero-Hours Worker

Scenario

Jenna works zero-hours at a care home. Her hours vary significantly:

Last 52 paid weeks earnings:

• Some weeks: £80 (4 hours at £20/hour)
• Some weeks: £400 (20 hours)
• Average week: £285

Total over 52 weeks: £14,820

Calculation

£14,820 ÷ 52 = £285 per week average

Holiday Pay

Jenna takes 1 week's holiday (5 days):

Holiday pay: £285

She typically works 3 days this particular week (Mon, Wed, Fri):

Holiday pay: £285 ÷ 5 × 3 = £171

What If They Haven't Worked 52 Weeks?

New Starters

If a worker has been employed for less than 52 weeks, use however many weeks they've worked.

Example: Started 6 months ago (26 weeks), earned £7,280 total.

£7,280 ÷ 26 = £280 per week average

Holiday pay: £280 per week of holiday.

First Holiday in Week 1

If someone takes holiday in their very first week, they may not have been paid yet.

Approach:

• Estimate based on their contract or expected hours
• Adjust on next payroll once actual earnings are known

Weeks with No Pay

How to Handle

Weeks with zero pay are skipped - don't count them in the 52.

Go back further to find 52 paid weeks.

Example:

• Worker employed for 60 weeks
• 8 of those weeks had no shifts (no pay)
• Use 52 paid weeks from the remaining 52

Why Skip Zero-Pay Weeks?

Including zero-pay weeks would artificially reduce average earnings.

The law requires using 52 paid weeks to protect workers.

Sickness and Statutory Pay

If a week includes only Statutory Sick Pay or Statutory Maternity Pay (and no normal wages), it's usually skipped.

Rationale: SSP/SMP aren't normal remuneration for work performed.

Accrual vs Payment Rate

Two Separate Things

Accrual: How much holiday the worker earns (12.07% of hours worked).

Payment: What rate to pay them when they take it (52-week average).

Don't confuse the two.

Accrual for Irregular Workers

From April 2024: Irregular hours workers accrue holiday as a percentage of hours actually worked.

Rate: 12.07% of hours worked = holiday hours accrued.

Example: Worker does 120 hours in a month.

120 × 12.07% = 14.48 hours holiday accrued

Payment Rate

When they take that accrued holiday, pay them using the 52-week average calculation.

Commission and Bonuses

Include Regular Commission

If commission is part of normal earnings and paid regularly, include it in the 52-week calculation.

Example: Sales rep earns base pay plus commission every month.

Add up base + commission for each week over 52 weeks, then divide by 52.

Exceptional Bonuses

One-off bonuses not linked to work performance (e.g., company-wide Christmas bonus) may be excluded.

General rule: If it's intrinsically linked to the performance of their role, include it.

Overtime and Shift Allowances

Always Include

If overtime, shift allowances, or premium pay were earned during the 52 weeks, include them in the total.

This is required by law following EU case law (Bear Scotland, Fulton v Tesco).

Example

Warehouse worker with irregular hours:

• Some weeks: Basic pay only (£300)
• Some weeks: Basic + overtime (£400)
• Some weeks: Basic + night shift allowance (£360)

52-week total: £18,200

Average: £18,200 ÷ 52 = £350/week

Holiday pay: £350/week, not basic pay only.

Seasonal Workers

Peaks and Troughs

Seasonal workers may have busy and quiet periods.

52-week average smooths this out.

Example: Retail worker:

• Oct-Dec: High hours (Christmas peak)
• Jan-Sep: Lower hours

52-week average captures both busy and quiet periods.

Off-Season

If there's an off-season where no work is offered and worker isn't employed, those aren't "weeks" for the calculation (employment is paused).

Agency Workers

Who Calculates?

The agency (as the employer) calculates and pays holiday pay using the 52-week method.

Gaps Between Assignments

If there are gaps between assignments with no pay, skip those weeks.

Varying Rates

If the agency pays different rates for different placements, include all rates in the 52-week calculation.

Part-Year Workers

What If They Only Work Part of the Year?

Use the 52 weeks they did work (or however many weeks if fewer than 52).

Example: Summer seasonal worker employed June-September (17 weeks), earning £6,800.

£6,800 ÷ 17 = £400 per week average

Holiday pay: £400/week.

Term-Time Workers

School support staff who work term-time only:

• Use 52 paid weeks from actual weeks worked
• Skip school holiday weeks with no pay
• May need to go back more than 1 year to find 52 paid weeks

Common Mistakes

Mistake 1: Using 12 Weeks Instead of 52

Old law (pre-2020) used 12 weeks.

Current law: 52 weeks.

Impact: Using 12 weeks often under-represents earnings and underpays holiday.

Mistake 2: Including Unpaid Weeks as Zero

Wrong:

(Paid weeks + unpaid weeks as £0) ÷ 52 = artificially low average

Right:

Total from 52 paid weeks ÷ 52 = true average

Mistake 3: Paying Basic Rate Only

Ignoring overtime, commission, and allowances that should be included.

Risk: Unlawful deduction from wages claims stretching back 2 years.

Mistake 4: Not Going Back Far Enough

If there are gaps, you must go back further to find 52 paid weeks (up to 104 weeks maximum).

Mistake 5: Wrong Reference Period

Starting from the wrong week (e.g., first day of holiday rather than last complete pay period before holiday).

Rolled-Up Holiday Pay

What Is It?

Paying a percentage uplift on hourly rate instead of paying separately when holiday is taken.

Example: Pay £12/hour + 12.07% holiday pay = £13.45/hour total.

Is It Allowed?

Technically no, but widely used for irregular workers.

The law says holiday pay should be paid when leave is taken, not in advance.

Practical reality:

• Many sectors use it (especially agency work)
• Tribunals may offset already-paid rolled-up pay against claims
• Contracts must be clear it's being used

If You Use Rolled-Up Pay

1. State it clearly in the contract
2. Show it separately on payslips ("Holiday pay: £X")
3. Calculate correctly (12.07% for statutory minimum)
4. Encourage workers to take leave (not just accumulate pay)

Best practice: Don't use rolled-up pay. Calculate and pay properly when holiday is taken.

Record Keeping

What to Keep

For each irregular hours worker:

• Weekly/monthly earnings for at least 52 weeks
• Dates of holiday taken
• Holiday pay calculations used
• Accrual records (12.07% of hours worked)

Why It Matters

If a worker claims underpayment, you'll need to show:

• How you calculated their holiday pay
• That you used the 52-week method
• The figures you used

Software and Payroll

Modern Payroll Software

Most payroll systems now include:

• Automatic 52-week tracking
• Holiday pay calculations for irregular workers
• Accrual tracking

Make sure it's configured correctly for your workforce.

Manual Calculations

If calculating manually:

• Keep detailed spreadsheets
• Document your methodology
• Cross-check against payslips

Underpayment Claims

Time Limits

Workers can claim back holiday pay for up to 2 years.

Tribunal Claims

• Unlawful deduction from wages
• Can add up to significant amounts if systematically underpaid
• Interest may be added

Avoiding Claims

1. Use the 52-week method correctly
2. Include all elements of pay (overtime, commission, etc.)
3. Keep clear records
4. Audit your calculations regularly

Practical Tips

Tip 1: Use Software

Automate the 52-week calculation to reduce errors.

Tip 2: Regular Audits

Every 6 months, check:

• Are calculations correct?
• Is the reference period right?
• Are all pay elements included?

Tip 3: Clear Communication

Explain to workers how their holiday pay is calculated so they understand and trust the amount.

Tip 4: Document Your Process

Write down exactly how you calculate irregular hours holiday pay. Ensure consistency and train staff on the method.

Recent Legal Changes

April 2024 Changes

Irregular hours and part-year workers now accrue holiday based on hours actually worked (12.07%).

Impact: More accurate accrual, clearer entitlement.

52-Week Reference Period

Introduced in 2020, now well-established.

Replaced: The old 12-week reference period that caused widespread underpayment.

The Bottom Line

For irregular hours workers:

• Accrual: 12.07% of hours worked
• Payment rate: 52-week average of all earnings
• Include: Overtime, commission, allowances
• Exclude: Unpaid weeks (go back further)
• Result: Fair pay that reflects actual earnings patterns

Get this right to avoid tribunal claims and treat workers fairly.