Rolled-up holiday pay lets you pay irregular hours and part-year workers their holiday entitlement as an uplift on each payslip (typically 12.07% on top of their normal pay) rather than when they actually take leave. Since April 2024, this method is legally recognised in the UK for qualifying workers, giving SMEs a simpler way to handle holiday pay for staff whose hours change from week to week.
If you manage casual, zero-hours, or seasonal staff, this guide covers everything: who qualifies, how to calculate the correct rate, what to update in your contracts and payroll, and how to stay compliant.
What are the rules on rolled-up holiday pay in the UK?
From leave years starting on or after 1 April 2024, rolled-up holiday pay became a legally recognised method for paying holiday entitlement to irregular hours and part-year workers. The change followed legal challenges to previous calculation methods and brought UK rules into line with how many SMEs were already operating in practice.
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, April to March or July to June). The new rules apply from whichever leave year starts on or after 1 April 2024: so for most businesses, they are now fully in force.
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. Their hours change frequently — think a café assistant with a different rota every week, or a warehouse temp working on-demand.
A part-year worker is someone required to work only part of the year, with gaps of at least a week where they're neither required to work nor paid. Term-time teaching assistants, seasonal hospitality staff, and event workers are the clearest examples.
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 usual way.
For SMEs using casual, zero-hours, or seasonal staff, review every contract carefully; misclassification can lead to non-compliance and back pay claims.
How do you calculate rolled-up holiday pay for irregular hours workers?
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 your workforce and payroll setup. |
| 3. Calculate the amount | Apply 12.07% (statutory 5.6 weeks ÷ 46.4 working weeks). | Example: A worker earns £1,000 → rolled-up holiday pay = £120.70. If you offer more than 5.6 weeks, adjust: (holiday weeks ÷ 46.4) × 100. |
| 4. Update contracts & payslips | Amend contracts lawfully and configure payroll. | Add a separate payslip line for "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 staff to take their breaks. |
| 6. Review annually | Check the method still fits your workforce. | Update rates or contracts if entitlements or business needs change. |
Getting the percentage or classification wrong risks underpayments and non-compliance — a costly problem for small businesses.
Step-by-step implementation for SME managers
Once you've decided to use rolled-up holiday pay, here's how to put it in place; from identifying who qualifies to updating your contracts and payroll.
Step 1: Which workers qualify for rolled-up holiday pay?
Start by reviewing your staff contracts. Anyone with hours that vary week to week, or who only works part of the year (seasonal staff, zero-hours workers) may count as an irregular hours worker or part-year worker.
Check how consistent the hours are across each pay period. If a worker has a fixed rota or guaranteed minimum hours, they probably don't qualify.
⚠️ Misclassifying staff is one of the most common compliance risks here. Paying rolled-up holiday pay to regular workers could breach UK law and trigger back-pay claims.
Step 2: Is rolled-up holiday pay the right method for your team?
Rolled-up holiday pay suits irregular and part-year workers well, but it's worth comparing the two methods before committing.
| 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 and are paid when they take time off. | Regular or fixed-schedule staff. |
Also consider whether employees will still take their holidays if they're paid upfront: you're still legally required to encourage rest periods. And check that your payroll system can add a separate line for the rolled-up amount; this is a legal requirement, not optional.
Step 3: How to calculate the 12.07% rate
For most irregular hours and part-year workers, statutory holiday entitlement is 5.6 weeks per year: equivalent to 12.07% of hours worked.
Formula: Holiday percentage = (5.6 ÷ 46.4) × 100 = 12.07%
If your business offers more than the statutory minimum, adjust accordingly:
Adjusted rate = (your 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 — shown as a separate line item on the payslip.
Step 4: Update contracts, payroll and payslips
Once you've confirmed the calculation, update your employment contracts and payroll setup.
- Contracts: Issue a written variation explaining the change to rolled-up holiday pay. Consultation may be required if you're amending existing terms.
- Payroll: Add a distinct line for "rolled-up holiday pay" on every payslip. It must be paid on top of normal wages, not folded into them.
- Compliance: Check that total pay still meets National Minimum Wage requirements once the holiday portion is excluded.
Be clear with staff about what's changed, how much they're entitled to, and that they still need to take their holidays even though they're being paid for them continuously.
Step 5: Monitor holiday take and carry-over
Even with rolled-up holiday pay in place, your duty of care doesn't go away. You must still make sure employees actually take their leave entitlement.
Keep an eye on:
- Whether staff are booking and taking time off.
- How sickness or family leave affects accrual: in these cases, calculate based on average weekly pay over the preceding weeks.
- Accurate records of hours worked, pay, and leave taken for each leave year.
Rolled-up pay changes how workers are paid for their leave, not whether they must take it.
Step 6: Review annually and adjust if necessary
Treat rolled-up holiday pay as a living system, not a one-off setup. Each year:
- Review whether this approach still fits your business model.
- Recalculate the rate if you've increased contractual holiday entitlement.
- Check for updated guidance from HMRC, Acas, or ACCA Global in case anything has changed.
A yearly review also gives you a clear audit trail if questions ever come up from employees or HMRC.
Quick checklist for SME managers
Rolled-up holiday pay is straightforward once your systems are set up correctly. Use this before each leave year:
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✅ Confirm leave-year start date for every worker.
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✅ List all irregular and part-year contracts to check eligibility.
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✅ Choose your pay method (rolled-up or accrual) and update internal policies.
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✅ Calculate the correct uplift (typically 12.07%) each pay period.
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✅ Amend contracts, inform staff, and update payslips accordingly.
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✅ Monitor holiday take, sickness, and carry-over cases to stay compliant.
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✅ Review annually and keep a full audit trail of decisions.
How Shiftbase helps with rolled-up holiday pay
Managing rolled-up holiday pay across a team of irregular hours workers doesn't have to mean spreadsheets and manual calculations. Shiftbase connects the three things you need in one place:
- Employee scheduling: full visibility over variable and part-year shifts, so you always know who's working and when.
- Time tracking: hours captured as they happen, giving you accurate data for every 12.07% calculation.
- Absence management: leave requests, balances, and carry-over tracked automatically, so nothing falls through the gaps.
When payroll runs, Shiftbase exports clean, period-accurate data (including rolled-up holiday pay as a separate line item) directly to your payroll provider. No re-entry, no reconciliation, no month-end scramble.
👉 Try Shiftbase free for 14 days — no credit card required.
