Leaving a Job: What Happens to My Holiday?

They must pay you for accrued but untaken holiday

When your employment ends, your employer is legally required to pay you for any statutory holiday you have accrued but not taken. This is called payment in lieu of holiday (PILON). This applies whether you leave voluntarily, are made redundant, reach the end of a fixed-term contract, or are dismissed.

The payment must be at your normal rate of pay — not a reduced or nominal rate. For variable-pay workers, this is generally calculated using a 52 paid-week reference period (looking back up to 104 weeks where needed).

How the calculation works

For regular-hours workers: Your employer calculates the proportion of the holiday year that has elapsed, multiplied by your annual entitlement. For example, if you leave on 30th September and the holiday year runs January to December, 9 months have passed — you have accrued 9/12 of your annual entitlement.

For irregular-hours/part-year workers: entitlement may be accrued using 12.07% (where the legal conditions apply), but holiday pay itself should still be calculated using the statutory pay-reference rules.

Example — regular hours: You are entitled to 28 days' holiday per year and leave on 30th September. You have taken 15 days so far. You have accrued (9/12 × 28) = 21 days. Minus 15 taken = 6 days owed to you. At a daily rate of £100, that is £600.

What if you have taken more than you have accrued?

If you have taken more holiday than you have accrued by the time you leave, your employer can deduct the overpayment from your final pay. However, they must:

• Have a clear contractual right to make the deduction (check your contract for a holiday overpayment clause)
• Give you notice of the deduction before it is made
• Only deduct a reasonable amount — they cannot claim back the full value of holiday taken in previous leave years

If the deduction would cause you serious financial hardship, you can ask ACAS or Citizens Advice for advice on whether it is reasonable.

Notice periods and holiday

If you are required to work out a notice period, you continue to accrue holiday throughout that period. An employer can require you to take holiday by giving the statutory minimum notice (generally at least twice the leave to be taken), unless your contract sets different notice rules.

If you are on garden leave during your notice period, you continue to accrue holiday as normal.

What to check on your P45 and final payslip

Your final payslip should show:

• A separate line item for payment in lieu of holiday (PILON)
• The number of days paid out and the rate per day
• Any deduction for over-taken holiday, with a clear explanation

If you are unsure whether the calculation is correct, you can calculate what you believe you are owed and compare. ACAS (0300 123 1100) can advise if you think there is an error.