Holiday Pay – Top 10 things you need to know

No-nonsense guide to the new Holiday pay law

Simplified in 10 steps:

  1. Stop using 12.07% of pay or hours (unlawful)
  2. Stop the practice of rolled-up holiday pay (unlawful)
  3. Stop using holiday entitlement based on hours/days worked
  4. Start recording weekly pay for each worker – and maintain up to 104 weeks of history alongside your current pay frequency (monthly, 2/4-Weekly etc.)
  5. Start calculating 1-weeks pay as the rolling average over the last 52 paid weeks (exclude unpaid weeks) or fewer weeks if you do not have 52
  6. Decide on a holiday year reset date – e.g. a company-wide date or personalised individual workers’ start date
  7. Ensure all workers receive 5.6 weeks of holiday pay entitlement per year (as calculated above) accrued in year 1 or prorated thereafter from the start date/holiday year reset date
  8. Decide how to convert weeks into days (or hours) e.g. 1-week = 5-days is a good starting point which allows workers to book 28 days in a year and receive 5.6 week’s pay
  9. Decide on which days are bookable (weekdays, weekends, public holidays)
  10. Allow workers to book and take holiday ensuring they do not work and are paid as above – the principle is that they need to earn the same pay while on holiday as they would at work