An employer’s guide to holiday accrual in the UK

• Minimum entitlement applies: Employees are entitled to the statutory minimum of 5.6 weeks’ (28 days) paid holiday per year

• Mandatory for some workers: The accrual system is mandatory for irregular-hours workers and part-year employees

• Optional for regular-hours employees: Employers can choose whether to use accrual or an annual leave year for regular-hours workers

• Holiday accrues while on leave: Holiday continues to accrue while employees are on sick leave or statutory leave, including maternity, paternity and adoption leave 

Recent changes to the Working Time Regulations introduced in 2024 mean that the way holiday accrual works has changed for some workers. Slightly different rules apply to regular-hours workers and irregular-hours or part-year workers.

Regular-hours workers can either have their leave provided as an annual leave entitlement (where they receive all their leave at the start of the year) or using the holiday accrual system.

For regular-hours workers using the accrual system, they receive 1/12 of their annual entitlement every month. By the end of the year they’ll have access to the full statutory minimum of 5.6 weeks (28 days). 

The 2024 update to the Working Time Regulations made it mandatory to calculate holiday entitlement and handle accrual in a specific way. Irregular-hours and part-year workers gain leave at a rate of 12.07% x the hours they’ve worked in a pay period. 

The 12.07% figure is based on the fact that all workers are entitled to 5.6 weeks’ leave per year, leaving a worker’s total working weeks per year at 46.4. 12.07% of 46.4 is 5.6, so you can use the percentage to calculate the correct entitlement for workers on irregular-hours or part-year contracts.

Employees continue to accrue leave while they’re on sick leave or statutory leave, such as maternity, paternity, adoption or parental leave. 

In situations where employees are unable to take their full statutory entitlement of leave before the year ends, they can carry accrued holiday over into the new leave year.

The entitlement to carry over accrued holiday is also in place for irregular-hours and part-year workers.

Employees are entitled to a week’s pay for each week of statutory leave taken, which is known as “holiday pay”. This means that employees aren’t disadvantaged financially when taking annual leave. 

The way to calculate how much holiday an employee has accrued in a period depends on what type of worker they are and how many hours or days they work.

To calculate holiday accrual for regular-hours workers, you first need to establish how many days they’re entitled to per year. For full-time employees this is 28 days, but for part-time workers you need to use the following formula: 

• Days worked per week ÷ 5 days x 28 days = Annual entitlement

For example, someone that works three days per week ends up with 16.8 days of leave per year.

Next, divide the annual entitlement by 12 to confirm how many days they accrue every month.

• For full-time employees that work 5 days per week: 28 days ÷ 12 = 2.3 days

• For a part-time employee that works 3 days per week: 16.8 ÷ 12 = 1.4 days

For part-year or irregular-hours workers, use the 12.07% formula instead: 

• Hours worked ÷ 100 x 12.07 = Hours of leave accrued that month

Here are some examples based on different types of workers: 

Employees can choose when to take their accrued holiday if it’s within the same year—subject to the usual time-off approvals process. Employees should be encouraged to use their full statutory leave entitlement, but in some situations that isn’t always possible.

If an employee can’t take their full entitlement, or they’re prevented from doing so, they can carry over annual leave into a future year: 

Employees might be able to carry over more leave than the above if it’s outlined in a workforce agreement, employment contract or collective agreement. This is more common if a company offers more than the statutory minimum for holiday entitlement or offers unlimited paid time off.

The only time where an employee can take “payment in lieu” of taking statutory leave is when they leave their job—whether by resignation, redundancy or dismissal. Any hours or days of entitlement earned but not yet taken should be paid in an employee’s final paycheque. 

If an employee has taken more leave than they’re entitled to, this can only be taken from their final paycheque if agreed in advance—for example as part of an employment contract or terms and conditions. 

Most UK businesses use the accrual system, at least for the first year. But if you don’t want to, you can use an alternative instead: annual leave entitlement. Employees gain access to their full year’s statutory leave at once, without having to wait for it to accrue every month.

The annual leave entitlement system is more flexible for employees, as they can book a longer holiday sooner. However, it can introduce complications for employers—especially if an employee leaves before the end of the year. 

For irregular-hours and part-year workers there is no alternative: you must use the accrual system for holiday entitlement. 

Working out holiday entitlements and accrual doesn’t have to be a challenge. The right HR software will take care of the calculations and balance updates for you, so there’s no confusion over how much holiday an employee can take.

Personio’s absence management software includes:

• Configurable leave policies

• Holiday accrual rules

• Centralised people data

• Public holidays and sick leave entitlements for UK built-in

• Employee self-service (ESS) access for booking and managing leave

• Easy time off approvals and tracking

• Audit log for compliance purposes

Book your demo to learn how Personio can help you manage time off (including holiday accruals for all types of workers) in one place.

The amount of hours or days that an employee accrues per month depends on which type of worker they are. Full-time employees are entitled to 28 days per year, which works out at 2.3 days per month. For part-time workers, irregular-hours workers and part-year workers, use a holiday entitlement calculator to find the correct figure.

Employers can decide to include bank holidays within the statutory minimum entitlement of 5.6 weeks (or 28 days). If you do, this should be clearly explained within your employment contract to avoid any confusion. 

Yes, your HR software should calculate holiday entitlements automatically if it’s designed for the UK (like Personio). If your HRIS is built for US businesses you may need to use manual workarounds to ensure you correctly calculate holiday entitlements and accruals.

HR software designed for the UK will automatically calculate the correct statutory holiday entitlement for an employee. The system will then update automatically when an employee books annual leave, so it’s always clear how much leave has been taken and what is left—making it easier for managers to encourage employees to take their full entitlement.

• Holiday pay and entitlement reforms - gov.uk

• Taking holiday before leaving a job - gov.uk

• Carrying over holiday - acas.org.uk