How to Implement Rolled-Up Holiday Pay For Irregular Hours Staff

Managing holiday pay for staff with irregular or part-year hours has become a real headache for many SMEs since the April 2024 rule changes. Between shifting rotas, casual contracts, and payroll compliance, even well-meaning employers can end up paying incorrectly or breaking the law without realising it.

This guide breaks down exactly how to implement rolled-up holiday pay for irregular hours and part-year workers, step by step. You’ll learn who qualifies, how to calculate the correct rate, what to update in your contracts and payroll, and how to stay compliant while keeping things simple.

The regulatory backdrop (leave years beginning on or after 1 April 2024)

From leave years starting on or after 1 April 2024, new rules apply to how holiday pay for irregular hours and part-year workers must be calculated and paid. The aim is to make the system fairer and easier to manage, following legal challenges to previous methods.

A “leave year” is the 12-month period used to calculate a worker’s annual holiday entitlement. Many businesses align it with the calendar year, but others use a different cycle (for example, July to June). That means some SMEs won’t be affected until their next leave year begins after April 2024, so there’s still time to prepare if your leave year hasn’t reset yet.

Who counts as an “irregular hours worker” or “part-year worker”?

According to Acas, an irregular hours worker is someone whose paid hours are “wholly or mostly variable” in each pay period. In other words, their hours change frequently. For example, a café assistant with different shifts every week or a warehouse temp working on-demand.

A part-year worker is someone required to work only part of the year, with periods of at least a week where they’re not required to work and not paid. Think of term-time teaching assistants, seasonal hospitality staff, or event workers.

These definitions matter because only these categories can legally receive rolled-up holiday pay. Regular full-time or fixed-schedule part-timers must still receive paid time off in the normal way.

For SMEs using casual, zero-hours, or seasonal staff, this means reviewing every contract carefully to ensure you’re applying the right method; misclassification can lead to non-compliance and back pay claims.

💡 You can easily track which workers qualify using Shiftbase; it automatically identifies irregular or part-year schedules and keeps your payroll data compliant.

How to calculate rolled up holiday pay for irregular hours workers

Let’s make the maths part simple; here’s how to calculate rolled-up holiday pay correctly so you stay compliant and transparent with your team.

Step	Action	Details / Example
1. Identify qualifying workers	Review contracts and hours patterns.	If hours are variable or workers only work part of the year, they qualify.
2. Decide if rolled-up is best	Compare rolled-up vs accrual.	Rolled-up adds 12.07% to each payslip; accrual pays holiday when leave is taken. Choose based on staff culture and payroll system.
3. Calculate the amount	Apply 12.07% (statutory 5.6 weeks ÷ 46.4 working weeks).	Example: A worker earns £1,000 → rolled-up holiday = £120.70. If you offer more than 5.6 weeks, adjust the percentage: (holiday weeks ÷ 46.4) × 100.
4. Update contracts & payslips	Amend contracts lawfully and configure payroll.	Add a separate payslip line showing “rolled-up holiday pay.” It must be in addition to normal pay, not absorbed into it.
5. Monitor and record	Track holiday taken and carry-over.	Rolled-up pay doesn’t remove the right to time off; you must still encourage employees to take their breaks.
6. Review annually	Check the method still fits your workforce.	Update rates or contracts if entitlements or business needs change.

Example calculation:
If an irregular hours worker earns £500 in a week, their rolled-up holiday pay = £500 × 12.07% = £60.35. This total (£560.35) should appear on the payslip with a clear breakdown line for “holiday pay.”

Why this matters: Getting the percentage or classification wrong can easily lead to underpayments or non-compliance; a costly risk for small businesses.

💡 Shiftbase automates this calculation; simply set your holiday rule once, and the system applies the correct rolled-up rate for every irregular or part-year worker automatically.

Step-by-step implementation for SME managers

Once you’ve decided to use rolled-up holiday pay, here’s how to implement it smoothly; from identifying who qualifies to updating your payroll system and contracts.

Step 1 – Identify which workers qualify

Start by reviewing your staff contracts. Anyone with hours that vary every week or who only works part of the year (like seasonal or zero-hours staff) may count as an irregular hours worker or part-year worker.

Map out each pay period and check how consistent the hours are. If a worker has a fixed rota or guaranteed minimum hours, they probably don’t qualify.

⚠️ Misclassifying staff is a common compliance risk. Paying rolled-up holiday pay to regular workers could breach UK law and trigger back-pay claims.

Step 2 – Decide whether rolled-up holiday pay is the best option

Next, decide if rolled-up holiday pay suits your workforce better than the traditional accrual model.

There are two main methods:

Method	How it works	Best for
Rolled-up holiday pay	12.07% added to each payslip, representing holiday entitlement.	Irregular hours or part-year staff where hours fluctuate.
Accrual method	Staff accrue leave over time (typically 12.07%) and are paid when they take time off.	Regular or fixed-schedule staff.

Also consider your company culture. Will employees still take their holidays if they’re paid upfront? You’re still legally required to encourage rest periods; payment alone isn’t enough.

Finally, check whether your payroll system supports rolled-up holiday pay. You’ll need an additional field or payslip line to show the rolled-up amount clearly.

Step 3 – Calculate the amount

For most irregular hours workers and part-year workers, the statutory holiday entitlement is 5.6 weeks per year; equivalent to about 12.07% of hours worked.

Formula: Holiday percentage = (5.6 ÷ 46.4) × 100 = 12.07%

If your company offers more than the statutory minimum, adjust the percentage accordingly:

Adjusted rate = (holiday weeks ÷ 46.4) × 100

Example:
A café worker earns £1,000 this month.
£1,000 × 12.07% = £120.70 in rolled-up holiday pay.

This amount must appear as a separate line item on the payslip.

Step 4 – Update contracts, payroll and payslips

Once calculations are sorted, update your employment contracts and payroll setup.

Contracts: Issue a written variation explaining the switch to rolled-up holiday pay. Consultation may be required if you’re changing existing terms.
Payroll: Add a distinct payslip line for “rolled-up holiday pay.” This must be paid in addition to normal wages, not rolled into them.
Compliance: Check that total pay still meets National Minimum Wage requirements once the holiday portion is excluded.

Clear communication is key. Explain to staff how the change works, how much they’re entitled to, and that they still need to take their holidays even though they’re paid continuously.

💡 Shiftbase integrates scheduling, time tracking, and payroll; so your rolled-up holiday pay line automatically syncs with each worker’s hours.

Step 5 – Monitor holiday-take and carry-over issues

Even with rolled-up holiday pay, your duty of care remains. You must still make sure employees take their holiday entitlement.

Keep an eye on:

Whether staff are actually taking time off.
How sickness or family leave affects accrual in these cases, calculate based on average weekly pay over previous weeks.
Accurate record keeping for hours, pay, and leave taken for each leave year.

Rolled-up pay only changes how workers are paid for their leave; not whether they must take it.

💡 Shiftbase makes tracking leave easy with built-in reminders to help ensure every employee takes their holiday before carry-over deadlines.

Step 6 – Review annually and adjust if necessary

Finally, treat rolled-up holiday pay as a living system, not a one-off setup. Each year:

Review whether this approach still suits your business model.
Recalculate the rate if you’ve increased contractual holiday entitlement.
Keep an eye on updates from HMRC, Acas, or ACCA Global for any new compliance guidance.

Doing a yearly review also helps prove due diligence in case of audits or employee disputes.

Quick checklist for SME managers

If you only remember one thing from this guide, make it this: rolled-up holiday pay is simple once your systems are clear.

✅ Confirm leave-year start date for every worker.
✅ List all irregular and part-year contracts to check eligibility.
✅ Choose your pay method (rolled-up or accrual) and update internal policies.
✅ Calculate the correct uplift (typically 12.07%) each pay period.
✅ Amend contracts, inform staff, and update payslips accordingly.
✅ Monitor holiday take, sickness, and carry-over cases to stay compliant.
✅ Review annually and keep a full audit trail of decisions.

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How Shiftbase simplifies rolled-up holiday pay management

Implementing rolled-up holiday pay doesn’t have to be a spreadsheet nightmare. With Shiftbase, you can automate every step; from tracking variable hours to calculating accurate 12.07% holiday uplifts. Our employee scheduling tool gives full visibility over irregular and part-year shifts, while time tracking and absence management ensure every hour, absence, and holiday is properly logged.

When it’s time to pay, our payroll integration exports clean, accurate data for each pay period (including rolled-up holiday pay as a separate item) helping you stay compliant with UK regulations. Shiftbase also syncs seamlessly with external payroll tools, eliminating manual re-entry and reducing costly errors.

In short, Shiftbase gives SMEs the automation, transparency, and compliance confidence they need to manage holiday pay for irregular hours and part-year workers with ease.

👉 Try Shiftbase free for 14 days and see how simple compliant holiday pay management can be.

Frequently Asked Questions

No. The option to use rolled-up holiday pay is limited to workers who qualify as “irregular hours” or “part-year” under UK rules, and only for leave years beginning on or after 1 April 2024. For regular hours staff, the traditional method must still apply.
For many irregular-hours or part-year workers, you calculate roughly 12.07% of their total pay in each pay period (based on 5.6 weeks’ statutory leave ÷ remaining working weeks). If their contract gives more than 5.6 weeks, you must adjust the percentage accordingly.
Yes. Paying rolled-up holiday pay does not remove the worker’s right to time off for statutory annual leave. You must encourage holiday-take and manage rotas accordingly.
Since the worker has already been paid holiday entitlement via the uplift, there is typically no further payment in lieu of untaken holiday. However you must ensure the pay was correctly calculated and recorded. Review contract and payslip records carefully.
Risks include: mis-classification of workers, under-payment of holiday entitlement, not encouraging leave-take (which may lead to legal claims), incorrect contract variations, and incorrect payslip labelling. Proper documentation and payroll setup are essential.