Calculating holiday entitlement correctly is essential for every UK employer. Errors lead to underpayment, disputes, and potential employment tribunal claims. This guide walks you through the rules, the formulas, and real worked examples so you can get it right every time.
Under the Working Time Regulations 1998, all workers in the UK are entitled to a minimum of 5.6 weeks of paid annual leave per year. For someone working 5 days per week, that works out to 28 days. This is the maximum the government requires. It cannot be replaced by a payment in lieu, except when someone leaves the job.
The 28-day figure is also the statutory cap. Even if someone works 6 days per week, the statutory entitlement remains 28 days (5.6 × 5 = 28 for calculation purposes, capped at 28).
There is no statutory right to bank holidays off. Employers can include bank holidays within the 28-day entitlement. Many employers offer 20 days of annual leave plus 8 bank holidays, which totals 28 days. Others offer additional days on top.
Whatever your approach, make it clear in the employment contract whether bank holidays are included in or additional to the holiday allowance.
Part-time workers are entitled to the same 5.6 weeks, but calculated based on their working pattern. The formula is:
Days per week × 5.6 = annual entitlement in days
3 × 5.6 = 16.8 days per year. You can round this up to 17 days if your policy rounds up.
4 × 5.6 = 22.4 days per year.
For employees who work irregular hours, you can calculate entitlement in hours instead of days. Multiply their weekly contracted hours by 5.6 to get their annual entitlement in hours.
When someone starts or leaves part way through the holiday year, you need to calculate their entitlement on a pro-rata basis.
The formula is:
(Full-year entitlement ÷ 12) × number of complete months worked
Or for a more precise calculation:
(Full-year entitlement ÷ 365) × number of calendar days in the period
If your holiday year runs January to December and a full-time employee with 28 days entitlement starts on 1 July, they have 184 days remaining in the year.
28 ÷ 365 × 184 = 14.1 days (rounded to 14 or 14.5 depending on your policy).
A full-time employee with 28 days leaves on 31 March. They worked 90 days of the holiday year.
28 ÷ 365 × 90 = 6.9 days. If they took 10 days of leave, they have been overpaid by 3.1 days. You can deduct this from their final pay if the contract permits it.
Holiday entitlement continues to accrue during:
This means an employee returning from a year of maternity leave will have a full year's holiday entitlement to use. Many employers allow this to be carried over into the next holiday year to avoid someone taking months of leave back-to-back.
Many employers offer more than the statutory minimum. If your contracts state 25 days plus bank holidays (33 days total), the first 28 days are statutory and the remaining 5 are contractual. The rules around carry-over and payment in lieu may differ between the statutory and contractual portions, so keep this distinction clear in your policies.
Some employers use accrual-based leave rather than giving the full allowance on day one. Under accrual, employees build up leave month by month. For example, an employee with 28 days entitlement accrues 2.33 days per month (28 ÷ 12).
This approach is popular for the first year of employment, as it prevents new starters from taking their full allowance and then leaving early.
LeaveApprove takes the manual calculation out of holiday entitlement: