Shift Allowance UK: What it is, How to Calculate it, and Stay Compliant

What is shift allowance

Shift allowance is extra pay you give to employees for working less-than-ideal hours such as nights, weekends, or bank holidays. It’s a way of saying: “Thanks for covering that awkward shift.”

In the UK, there’s no legal obligation to offer a shift allowance. But if you want to attract (and keep) good staff on a 24/7 rota, it’s often expected.

You can think of it as a top-up on top of someone’s usual hourly wage or salary. And yes, it needs to be clearly stated in their employment contract.

Types of shift allowance

Here are the most common types of shift allowance used in the UK:

• Night shift allowance: This is paid to employees working late-night hours, usually between 11pm and 6am. It's often a percentage of base pay (e.g. +20%) or a flat fee per hour.
• Weekend allowance: Paid to staff who regularly work Saturdays or Sundays. This could be double pay (time and a half) or another fixed top-up. Not legally required, but highly recommended if you want to cover weekends without complaints.
• Bank holiday allowance: Most employers offer enhanced rates for working public holidays—sometimes double pay, or a bonus day off in lieu.
• Rotating shift allowance: For jobs with changing shift patterns (like early, late, or night), some employers offer a rolling allowance to cover the disruption to personal life. It's less about the hours and more about the unpredictability
• On-call or standby allowance: Used when employees are expected to be available outside of normal hours—even if they’re not actively working. This is usually a small flat fee paid per shift or per hour on standby.
• Unsociable hours premium: Covers any hours worked outside the standard 9 to 5, even if it’s not a night shift. Think late evenings or very early mornings. It’s often applied flexibly depen ding on the industry.

How is shift allowance calculated?

There’s no legal formula, but most employers follow one of the following three methods to work out shift allowance and reward employees fairly for working shifts that are outside the regular 9–5: 

1. Percentage uplift on base pay

This is the most common approach. You simply add a percentage to the employee’s usual hourly rate.

Example:

• Base rate: £11/hour

• Night shift uplift: +20%

• Shift allowance: £11 × 20% = £2.20 extra/hour

• Total pay: £13.20/hour

✅ Easy to calculate
✅ Scales with pay
❌ Can get expensive if you have lots of premium shifts

2. Flat rate per hour or per shift

Some companies prefer to keep things simple with a fixed fee.

Example:

• £3 per hour extra for unsociable shifts

• Or £15 extra for working a Sunday

✅ Clear and predictable
✅ Easier for budgeting
❌ May feel unfair to higher-paid workers

3. Enhanced pay (time and a half / double time)

Popular for bank holidays or emergency shifts.

Example:

• Time and a half = 1.5× base rate

• Double time = 2× base rate

• Base pay: £12/hour → Double time = £24/hour

✅ Often expected in unionised or public sector roles
❌ Can really add up if not managed well

Here is a quick summary of table 👇:

How is shift allowance paid to employees?

Once you’ve calculated the amount, it’s time to pay it, correctly and clearly.

Here’s how most UK employers do it:

1. Add to regular payroll

The shift allowance is included in the employee’s monthly or weekly payslip as a separate line (e.g. “Night Shift Premium” or “Sunday Bonus”).

💡Tip: Always itemise the allowance clearly. Employees want to see what they’ve earned and why.

2. Record it in the employment contract

Even though shift allowance isn’t required by law, once you offer it, it becomes a contractual entitlement.

That means:

• Specify which shifts are eligible

• Define the amount or formula

• State if it changes with role, seniority, or location

3. Treat it as taxable income

Shift allowances are subject to:

• Income Tax

• Employee and Employer National Insurance Contributions (NICs)

This means your payroll software needs to handle it like any other form of earnings. No special tax treatment here.

What are the legal rules around shift allowance?

You’re not legally required to offer shift allowance in the UK, but when you do, you need to make sure it plays nicely with key employment laws; especially the National Minimum Wage (NMW) and the Working Time Regulations (WTR).

Let’s walk through both.

National Minimum Wage: what counts and what doesn’t

Shift allowances do not count towards the minimum wage threshold when calculating whether an employee is being paid fairly for time worked.

Let’s say someone earns £10.50/hour base pay and gets a £2/hour night shift allowance.

• Their total earnings are £12.50/hour

• But for NMW purposes, only the £10.50 counts

• If the NMW is £11.44 (2025 rate for over 21s), you’re underpaying them unless you raise the base rate

Always make sure their base pay alone meets or exceeds the National Minimum Wage.

Here is a quick summary on what’s included/excluded in NMW calculations

Working Time Regulations: rest and safety rules

Even if you pay extra, you still need to follow the Working Time Regulations 1998 which are all about protecting employee health.

Here’s what to keep in mind:

• Night workers (working 3+ hours between 11pm–6am) can’t work more than 8 hours in a 24-hour period (on average)

• Employees must get 11 consecutive hours of rest between shifts

• There’s a 24-hour rest period every 7 days, or 48 hours every 14 days

• 20-minute breaks required if shift is longer than 6 hours

⚠️ Important: You can’t ignore these rules just because someone agrees to it. Even with a contract, WTR protections still apply.

Keep it in writing

Legally speaking, if you offer a shift allowance  (even if informal) it forms part of the employment contract. You must:

• Clearly state when the allowance applies

• Define how it’s calculated

• Include it in payslips

• Update contracts or policies if it changes

💡 Top tip: Review contracts at least once a year; especially if NMW or working time rules change (which they often do!).

Additional resources

Employment laws and minimum wage rates tend to change quietly (but often). To avoid any nasty surprises during payroll or inspections, it’s smart to keep these official resources close at hand:

UK Government: National Minimum Wage and Living Wage

For calculating pay to avoid underpayment even if you offer shift allowances: 🔗https://www.gov.uk/national-minimum-wage-rates

• Shows the current minimum wage rates (updated every April)

• Explains who qualifies for what rate

• Guidance on what does and doesn’t count towards minimum pay

Health and Safety Executive (HSE): Managing shift work

Useful for planning rotas or setting up new shift systems. 🔗https://www.hse.gov.uk/pubns/books/hsg256.ht

• Offers advice on fatigue risk, night work, and health

• Includes templates and tips for designing safe shift schedules

• Explains how to comply with the Working Time Regulations

ACAS: Contracts and working hours

Use this when formalising shift pay or updating employee agreements. 🔗https://www.acas.org.uk/employment-contracts

• Breaks down how to write or update employment contracts

• Explains what should go in writing when offering shift allowances

• Offers guidance for handling disputes or changes in terms

How Shiftbase helps you manage shift allowances

Managing shift allowances manually is a pain. Between calculating premiums, checking compliance, updating schedules, and keeping everyone happy… it’s a full-time job on its own.

That’s where Shiftbase comes in.

With our all-in-one workforce management software, you can:

• Create smart employee schedules that automatically flag night, weekend, or holiday shifts

• Use built-in time tracking to accurately log worked hours (no more guesswork)

• Stay on top of absence management so shift gaps are covered without overloading your team

• Export clean, compliant reports—so payroll is sorted in minutes, not hours

And the best bit? You can test all of this for free.

👉 Try Shiftbase free for 14 days and see how much easier shift allowance (and everything else) can be. No strings attached.