Variable Hours and Holiday Accrual

The accrual method for variable-hours workers

Workers with no fixed weekly hours — or whose hours vary significantly from week to week — do not receive a fixed number of days' holiday at the start of the year. Instead, they build up (accrue) holiday entitlement at a rate of 12.07% of the hours they work per pay period.

This is the statutory method for irregular-hours workers and part-year workers under the Working Time Regulations 1998, regulation 16, as amended for leave years beginning on or after 1 April 2024. It does not apply to workers with regular fixed hours.

Why 12.07%?

The 12.07% figure represents the statutory holiday entitlement (5.6 weeks) as a proportion of the working time in a year. The formula:

5.6 weeks ÷ (52 − 5.6 weeks) = 0.1207 (12.07%)

The 52 represents total weeks in a year; 5.6 is the holiday entitlement. The result is the percentage of each hour worked that represents holiday pay.

Example: You work 25 hours one week and 15 the next. You accrue 25 x 12.07% = 3.02 hours and 15 x 12.07% = 1.81 hours of holiday respectively. Over a year averaging 25 hours per week, you would accrue approximately 25 x 52 x 0.1207 = 157 hours. At a 7.5-hour day, that is about 21 days of leave booked at that day length.

Converting accrued hours to days

Because variable-hours workers may not work the same pattern each week, accrued holiday is typically tracked in hours rather than days. To convert to days:

Accrued holiday hours ÷ Standard day length (usually 7.5 hrs) = Holiday days

Your employer should agree with you what the standard day length is — typically based on the hours a comparable full-time worker would do per day (commonly 7.5 or 8 hours).

What happens on termination?

When your employment ends, your employer must pay you for any holiday you have accrued but not taken. This is called payment in lieu of holiday (PILON).

Your employer should calculate holiday pay for variable-pay workers using the statutory reference-period rules (generally 52 paid weeks, looking back up to 104 weeks where needed). Entitlement accrual and holiday pay are separate calculations.

If you have taken more holiday than you have accrued, your employer may be able to deduct the overpayment from your final pay — but they must give you clear notice of this and it must be a reasonable amount.

What your employer must do

• Track the hours you work each pay period and calculate the holiday accrued (at 12.07%)
• Provide you with a way to see how much holiday you have accrued — a written statement, payslip notation, or HR system access
• Allow you to take the accrued holiday — they can restrict when it can be taken but cannot unreasonably refuse
• Pay you for accrued but untaken holiday on termination of employment