Employer Not Paying Holiday Pay

Holiday pay for workers with regular hours is generally calculated based on their normal weekly pay. For workers with irregular hours or those on zero-hours contracts, the calculation typically uses an average over a 52-week reference period (excluding weeks where no pay was earned), as amended by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018. Holiday entitlement accrues from the first day of employment, and workers are entitled to be paid for accrued but untaken holiday when their employment ends. If an employer is not paying holiday pay correctly, keeping detailed records of hours worked and pay received is particularly important. A written request to the employer setting out the entitlement and how it has been calculated is often a sensible first step.

Common situations include: an employer claiming that holiday pay is included in the hourly rate (rolled-up holiday pay), not being paid for bank holidays despite the contract including them, being told there is no holiday pay entitlement on a zero-hours contract, receiving holiday pay that does not reflect regular overtime or commission, not receiving payment for accrued holiday on leaving, and an employer pressuring employees not to take their full holiday entitlement.

The Working Time Regulations 1998 (Regulations 13 and 13A) provide for 5.6 weeks of annual leave. Regulation 16 requires that workers be paid at the rate of a week’s pay for each week of leave. The Employment Rights Act 1996 (sections 221–224) sets out how a week’s pay is calculated. Following the Supreme Court decision in Harpur Trust v Brazel [2022], holiday entitlement for part-year workers was not pro-rated, though subsequent legislative changes may have affected this position. Section 13 of the ERA 1996 makes failure to pay holiday pay an unlawful deduction from wages. Rolled-up holiday pay — where holiday pay is included in the hourly rate — was previously considered non-compliant with the Regulations, though recent legislative developments have addressed this area.

People who believe they are not receiving correct holiday pay often consider checking their contract and payslips to understand how holiday pay is being calculated. Some explore raising the issue informally with their employer or HR department before taking formal steps. Others look into making a formal grievance, contacting ACAS for early conciliation, or bringing an employment tribunal claim for unlawful deduction from wages. Workers on irregular hours sometimes find it helpful to calculate their own entitlement using the 52-week reference period to compare against what they have received.

Common mistakes include: not realising that holiday entitlement exists from the first day of employment, accepting an employer’s claim that zero-hours workers have no holiday rights, not checking whether overtime and commission should be included in holiday pay calculations, missing the three-month less one day time limit for tribunal claims, and not keeping personal records of hours worked and holidays taken.