Calculating holiday pay

Currently the holiday pay of an employee with irregular working hours is calculated by averaging the number of hours worked over the previous twelve weeks (known as the “pay reference period”. Under the new regulations which take effect from 6 April, the pay reference period will be the previous 52 weeks. For those employees who have not worked for a full 52 weeks then the pay reference period is the full number of weeks worked.

Where the employee has been sick or has had a period of nil hours, the employer is expected to count back up to 104 weeks to find a 52 week period on which to base the calculation.

There is no further clarity on the mechanics of this calculation and we expect that the online calculator will be updated in due course to assist employers.

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