Am I entitled to holiday pay on a zero-hours contract?

Zero-hours contracts have become increasingly common in the UK, offering flexibility for both employers and workers. However, there are often questions surrounding the entitlement to holiday pay for those on zero-hours contracts. Are you entitled to holiday pay? And if so, how do you calculate your holiday entitlement? In this article, we will explore the answers to these questions and provide clarity on the rights of zero-hours contract workers when it comes to holiday pay.

Calculating Zero-Hour Contract Holiday Entitlement

Zero-hours contract employees accumulate their holiday entitlement based on the number of hours worked, rather than a fixed amount of weeks. In a year, there are 52 weeks, and after deducting the 5.6 weeks of holiday entitlement, employees are expected to work for 46.4 weeks. The holiday entitlement for zero-hours contract workers can be calculated by multiplying the number of hours worked by 12.07%, which represents the proportion of hours that make up the entitlement.

This table illustrates how the holiday entitlement for zero-hours contract workers can vary based on the number of hours worked. The entitlement is calculated by multiplying the number of hours worked by 12.07%.

Zero Hour Contract Holiday Pay Formula

The holiday pay for zero-hours contract workers is calculated based on their average pay over the previous 12 weeks. This calculation should only include the weeks in which the worker was actually paid. If a worker has been employed for less than 12 weeks, their holiday pay should be based on the average pay rate they received when they worked full weeks. The average pay is multiplied by the number of hours worked each week to determine the holiday pay for zero-hours contract workers.

Rolled-up Holiday Pay and UK Law

Rolled-up holiday pay, which involves including an amount for holiday pay in the hourly rate, is not allowed according to UK law. However, starting from 1 April 2024, employers will be able to use rolled-up holiday pay for irregular hours and part-year workers. It is important to note that the inclusion of rolled-up holiday pay should be clearly stated in the employment contract, and there are specific procedures that employers must follow if they plan to change the terms of the contract.

Pay for Taking Holiday Before Accumulating Entitlement

In some cases, you may want to take paid holiday before you have accumulated enough holiday entitlement. In the first year of employment, you may be able to take paid holiday before you have accrued enough entitlement, with the agreement of your employer.

To ensure fair pay, the holiday pay should be calculated based on various factors:

• Amount paid for the job
• Any pay already received
• What others in a similar job are paid for their holiday

This calculation is important to ensure that you receive fair compensation for the holiday taken before accumulating enough entitlement. It takes into account these factors to determine a reasonable payment.

Illustration of Fair Pay Calculation:

In this scenario, your holiday pay would be calculated by considering these factors:

1. Calculate the total payment you would receive for the holiday. For example, if you take 10 hours of holiday:

2. Deduct the pay already received:

3. Compare with comparable pay for others:

Based on these calculations, in this scenario, your fair holiday pay would be £150.

By taking into account these factors, employers can ensure that you receive fair compensation for holiday taken before accumulating enough entitlement, in accordance with UK law.

What Holiday Pay Must Include

By law, holiday pay must include various types of payments to ensure that employees are fairly compensated during their time off. Here are some key components that must be included in holiday pay:

1. Payments linked to contractual tasks

Any payments that are directly linked to tasks required in the employee’s contract must be included in their holiday pay. This can include commission payments, bonuses, or other incentives that are tied to specific job responsibilities.

2. Payments related to professional qualifications

If an employee receives additional payments or allowances based on their professional qualifications or certification, these should be included in their holiday pay. This ensures that employees are not disadvantaged financially when taking time off.

3. Overtime payments

If an employee regularly receives overtime payments, these should be factored into their holiday pay calculation. Overtime payments compensate employees for working additional hours, and it is important that they are not excluded when calculating holiday pay.