1. Statutory Entitlement: The 5.6-Week Rule
Under Regulations 13 and 13A of the Working Time Regulations 1998 (WTR 1998), every worker in the United Kingdom is entitled to 5.6 weeks of paid annual leave. This entitlement is split into two statutory tiers:
Regulation 13 Leave (4.0 Weeks)
Derived originally from the EU Working Time Directive. Must be paid at normal remuneration, including regular non-guaranteed overtime, commission, and shift enhancements. Cannot be carried forward except in specific statutory circumstances (e.g. sick leave).
Regulation 13A Leave (1.6 Weeks)
Additional UK domestic leave (equivalent to 8 bank holidays for a 5-day worker). Can be paid at basic pay rate unless contractual terms state otherwise. Can be carried forward into the next leave year under a written agreement.
2. The 12.07% Accrual Method & Rolled-Up Pay
Following the Supreme Court ruling in Harpur Trust v Brazel [2022], the UK government introduced the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (SI 2023/1426) to restore statutory fairness for irregular-hours and part-year workers:
The Statutory 12.07% Accrual Formula:
Accrued Leave Hours = Total Hours Worked in Pay Period × (5.6 ÷ 46.4) = Hours Worked × 12.071%
46.4 weeks represents a standard 52-week year minus the 5.6 weeks of statutory annual leave.
Employers of irregular-hours or part-year workers may also use Rolled-Up Holiday Pay (Regulation 16A), paying a 12.07% uplift on each payslip as hours are worked. This eliminates complex accrual tracking for casual and zero-hours staff, provided the payment is explicitly broken out on every payslip.
3. The 52-Week Reference Period and Final Pay
When calculating holiday pay for workers with variable hours or pay, employers must adhere to Sections 221 to 224 ERA 1996:
- 52-Week Calculation: Average weekly earnings are assessed across the 52 weeks worked prior to the leave date. Employers look back up to 104 weeks to disregard weeks without pay.
- Normal Remuneration: Payments such as overtime, performance commissions, shift bonuses, and standby pay must be factored into the 4 weeks of Regulation 13 statutory leave.
- Termination Settlement Formula: Under Regulation 14 WTR 1998, employers calculate remaining leave at termination using
(A × B) - C. Any accrued, untaken balance must be paid in full on the final payslip.