Rolled-Up Holiday Pay What is rolled-up holiday pay? Understand whether it's legal, how it works, and what it means for irregular workers.
Last updated: 30 January 2025 Rolled-up holiday pay provides an alternative way to manage holiday entitlement for certain workers.
What Is Rolled-Up Holiday Pay?
Definition
Rolled-up holiday pay means:
Element Description Holiday pay included In regular pay Higher hourly rate Includes holiday element No paid time off Take leave unpaid Already paid Holiday element with each pay
How It Works
Standard Holiday Rolled-Up Holiday Take 5 days leave Take 5 days leave Receive normal pay No pay during leave Already paid through year Included in hourly rate
The 12.07% Calculation
Calculation Detail 5.6 weeks holiday ÷ 46.4 working weeks = 12.07% Holiday uplift Applied to Each hour worked
Legal Position
Change in Law (2024)
Before 2024 From 2024 Technically unlawful Now permitted But widely used For specific workers Risk of claims Clearer rules
Who Can Receive Rolled-Up Pay
Worker Type Rolled-Up Permitted? Irregular hours workers Yes Part-year workers Yes Regular workers No Full-time employees No
Irregular Hours Workers
Defined as workers whose:
Criterion Detail Hours vary Each pay period Not contractual Can't predict hours Examples Zero-hours, casual, bank staff
Part-Year Workers
Workers who:
Criterion Detail Work part of year Not 52 weeks Gaps in work Defined periods Examples Term-time workers, seasonal
How It's Calculated
The Formula
Rolled-up pay = Basic pay + (Basic pay × 12.07%)
Or equivalently:
Rolled-up pay = Basic pay × 1.1207
Example Calculation
Element Calculation Basic hourly rate £12.00 Holiday element (12.07%) £1.45 Rolled-up rate £13.45/hour
On Payslip
Should show:
Element Amount Basic pay £12.00 × hours Holiday pay 12.07% × basic Total Sum of both
Taking Holiday
Under Rolled-Up Pay
When Taking Leave Position Time off Can still request Pay during leave None (already received) Entitlement Still 5.6 weeks Right to leave Not affected
Still Need Time Off
Important Workers still need Rest breaks Actual time off Annual leave Right to take Cannot be denied Leave itself
Advantages and Disadvantages
For Workers
Advantage Disadvantage Higher regular pay No pay when off Simpler calculation Must budget Cash in hand Less incentive to take leave Predictable May not rest
For Employers
Advantage Disadvantage Simpler admin Must track still Cash flow Workers may not take leave Clarity Must identify eligible workers
Compliance Requirements
What Employers Must Do
Requirement Detail Identify workers Who qualifies Calculate correctly 12.07% Show on payslip Separate identification Allow leave Cannot prevent time off
Payslip Requirements
Must Show Why Holiday pay element Separately identified Clear breakdown Worker can verify Calculation Transparent
Records and Evidence
Documentation
Record Purpose Worker classification Why rolled-up applies Pay calculations Show 12.07% Leave taken Track rest Payslips Evidence
If Challenged
Evidence Shows Classification rationale Worker type Consistent application Fair treatment Correct calculation Right amount
Common Issues
Incorrect Percentage
If Below 12.07% Issue Underpayment Worker underpaid Claim possible For difference Correction needed Pay arrears
Misclassifying Workers
Problem Risk Regular worker on rolled-up Not permitted May owe holiday pay When they take leave Potential claims For underpayment
Not Allowing Leave
Issue Position Cannot refuse leave Right to rest Rolled-up = pay method Not leave denial Health and safety Workers need breaks
Transitioning to Rolled-Up
If Changing Approach
Step Action Identify eligible workers Classification Calculate new rate Include 12.07% Explain change To workers Update systems Payroll, records
Communication
Tell Workers About New rate Higher hourly Why change Simpler system Holiday rights Still apply Leave process How to book
Checking Your Pay
For Workers
Check Action Are you eligible? Irregular/part-year Is calculation correct? 12.07% Is it on payslip? Separately shown Can you take leave? Still entitled
If Underpaid
Step Action Calculate shortfall What you should get Raise with employer Request correction Seek advice If not resolved Claim If necessary
Best Practice
For Employers
Practice Benefit Clear policy Everyone knows rules Correct calculation Avoid claims Proper records Evidence Encourage leave Worker wellbeing
For Workers
Practice Benefit Check payslip Verify payment Take leave Rest and wellbeing Keep records Evidence if needed Query issues Promptly
Comparison with Regular Holiday
Which Is Better?
Factor Regular Holiday Rolled-Up Clarity Know what leave is Higher rate unclear Rest Paid time off May not take leave Budgeting Steady income Variable (higher then lower) Admin More complex Simpler
Worker Preference
Some prefer rolled-up because:
Higher regular pay
Flexibility
Others prefer regular because:
Paid time off encourages rest
Clearer system
Frequently Asked Questions
What is rolled-up holiday pay? Rolled-up holiday pay is when holiday pay is included in your hourly rate rather than paid when you take leave. Instead of paid time off, you get a higher hourly rate that includes a holiday element (typically 12.07% extra).
Is rolled-up holiday pay legal? It was previously unlawful, but from January 2024, rolled-up holiday pay became legal for irregular hours workers and part-year workers. It's calculated at 12.07% of pay in each pay period.
Who can receive rolled-up holiday pay? From 2024, only irregular hours workers (whose hours vary significantly) and part-year workers (who don't work year-round) can receive rolled-up holiday pay. Regular workers must still receive paid time off. Disclaimer: This information is for general guidance only and does not constitute legal advice. Employment law is complex and changes frequently. For specific situations, consult ACAS, a qualified employment lawyer, or HR professional.