Holiday Pay On Zero Hours Contracts + Calculator for Employers

Last Updated on 1 July 2025 by Rebecca Young

Are you aware of the holiday pay on zero hours contract requirements?

For example, you may not know the holiday entitlement for zero hours contract workers stands as a minimum of 5.6 weeks of pro rata paid holiday each year which accrues as soon as they start working.

With these types of contracts on the rise, there’s never been a better time to understand the requirements and get the right HR advice to correctly calculate an irregular hours holiday entitlement, especially as zero-hour holiday pay is protected by the Working Time Regulations 1998.

In 2024, 3.1 percent of all workers in the United Kingdom were on a zero hour contracts, compared with just 0.4 percent in the mid-2000s, according to Statista, and as of March 2024, there were around 1,030,000 employees on zero hour contracts in the UK, according to ONS figures.

It’s a wise decision to take holiday pay for zero hour workers seriously, as ACAS states, ‘if an employer does not correct a problem with holiday pay, a worker could make a claim to an employment tribunal’. They have 3 months (minus 1 day from the date of the most recent wrong holiday) to do so.

In this article, we will cover the holiday entitlement zero hour contract staff have, cover the nuances of holiday pay for zero hour contracts, as well as the legal obligations to ensure you get it right, avoiding a costly tribunal or legal claim.

Holiday Pay On Zero Hours Contract Requirements: What Employers Need to Know

Holiday entitlement on zero hour contract is a legal requirement, and ‘workers with irregular hours or zero-hours contracts are entitled to paid holiday’ according to the UK Government.

There are two main considerations for employers: How zero hours holiday pay is accrued and how to make holiday payments for zero hour workers.

• Accrual of leave for irregular hours workers starting on or after April 1, 2024 is based on 12.07% of actual hours worked (a reflection of 5.6 weeks’ entitlement across a full year of work)
• Payment for leave for irregular hours workers should be calculated using average earnings over the previous 52 weeks
• Their ‘normal’ rate of pay must be reflected, which, according to the UK Government advice, ‘includes commission, regular overtime payments, and any payments related to length of service or professional qualifications‘
• Payment can also be made in the form of rolled-up holiday pay (RUHP), which is when an employer opts to pay holiday pay as an added amount on top of the worker’s rate. (This is only applicable to leave years commencing on or after April 1, 2024.)
• RUHP is calculated using a minimum of 12.07% of actual hours worked

It’s important to get this right, as zero hour workers are entitled to roll over their holiday accrual if an employer has failed to enable or encourage them to take holiday.

As stated by ACAS: “Employers have a legal responsibility to make sure workers can take the holiday they’re entitled to.

In fact, a worker can carry over a maximum of 4 weeks’ holiday entitlement if their employer:

• does not let them take all their holiday
• does not encourage them to take it all
• does not inform them that they will lose any holiday they do not take

We strongly recommend HR outsourcing to ensure you are legally sound in this area.

Why Managing Holiday Entitlement For 0 Hour Contract Employees Matters for Employers

Managing holiday entitlement for zero hour contract employees matters, as over 6 million UK workers are in insecure work that does not guarantee regular hours or income according to the Living Wage Foundation.

Businesses that use zero hours contract workers benefit from a flexible workforce that meets business requirements, but it’s important that workers who face work unpredictability and job insecurity compared to their employed counterparts don’t miss out on time to rest and recuperate.

Managing holidays for zero hours contracts correctly ensures entitlement is accurate and fair.

Creating a holiday zero hours contract can be complex, so we have covered all the nuances of calculating an entitlement in our article Annual Leave and Zero Hours Contracts – Employers Guide to the Annual Leave Calculation Changes.

How to Manage Your Workers Holiday Pay On A Zero Hours Contract Effectively

The UK law specifies that zero hour workers should receive ‘their average pay over the previous 52 weeks worked (taking the last whole week in which they worked and earned pay, ending on a Saturday, as the most recent week. Unless they are paid weekly on a day other than a Saturday.)

This means that employers must calculate how much zero hour contract paid holiday entitlement is due for the worker within their current leave year accurately.

The calculation must include not only the time worked but also be based on a worker’s regular earnings.

This includes:

• Payments linked to tasks require in the contract must be included (for example, hitting a monthly sales target)
• Other payments (for example being on call, working night shifts or voluntarily working overtime) regularly received must be included in the calculation of holiday pay, even if the overtime was not guaranteed)
• Payments related to professional or personal status (for example, if an annual, regular long service cash payment is made for each year or service, or if a worker receives an annual uplift in salary due to a certain qualification held)

To calculate holiday pay for zero hour contracts, the best method is to use an online holiday pay calculator.

The UK Government holiday entitlement calculator offers a step-by-step way to ensure the correct holiday payment is made. To use it, you’ll need to know when the leave year starts, if you’d like to calculate for a full leave year or partway through, as well as how many hours and shift patterns the worker does.

Additionally, you could manage holiday pay with processes and tools such as:

• A comprehensive holiday policy within your employee contracts to ensure pay is understood
• A system for tracking holiday use, so your calculations are correct
• Regular check-ins with zero hours workers to explain their holiday requirements

Holiday Pay on Zero Hours Contract: Common Employer Mistakes to Avoid

So, what common mistakes do employers make when arranging holiday pay entitlement for zero hours contracts? Typically, employers miss off one or more of the key elements needed in a contract for total employment law compliance.

A contract should state:

• The entitlement
• The accrual and how this is calculated
• How to request leave officially
• What happens if leave isn’t taken
• Whether bank holidays are included as holiday days, or if the business is trading
• How holiday pay is handled after a termination

We always recommend that an HR advisor explore your employee handbook and how the business promotes and advocates for holiday days to be taken.

Employers may also be unaware that it’s possible to be more generous with holiday entitlement for zero hours staff, if desired.

For example, employers:

• can include public and bank holidays as part of the statutory entitlement
• can give more paid holiday – they should include this within the employment contract under ‘contractual leave entitlement’.

Best Practices for Zero Hour Contract Holiday Pay Management

You may feel that the holiday pay 0 hour contract rules are confusing. So, what steps can savvy employers take to ensure nothing gets missed?

Our advice is to take a three-step approach to holiday pay.

1. Use an online calculator to get the right computation for your zero hours workers
2. Make an annual leave calculation each time the individual requests holiday leave for accuracy
3. Ensure smooth holiday pay management by tracking hours worked in a way that’s easy to access

Avensure PeopleCloud includes a state-of-the-art employee holiday tracker for quick reports about who is off, when, and also who still has to book their leave so you aren’t caught out.

Zero Hours Bank Holiday Pay: Special Considerations for Employers

Bank holiday pay for zero hours contract workers can be a confusing issue.

Simply, while workers on zero hours have the legal right to statutory holiday, there is no automatic legal right for them to have bank holidays off, unless this is otherwise stipulated in your contract and an employer can refuse the bank holiday day off if it would be unsuitable for the business just like any other day.

As such, you can approach a bank holiday for a zero hours worker as if it were any other day of holiday, allowing them to take the bank holiday off if it has been accrued and if the business has capacity for the employer to take the time off.

If the business closes on a bank holiday but the worker hasn’t accrued any holiday yet, this can be given as an unpaid day of leave, arranged at the manager’s discretion.

In summary, zero hour contract bank holiday pay is not automatically given.

0 Hours Contract Holiday Entitlement: Ensuring Compliance

How can employers stay compliant as legislation evolves around the entitlements for employees without fixed hours?

The best way is to get the right legal advice and to ensure that the right systems and policies are in place to simplify holiday pay for zero-hour staff.

Great examples include:

• Seeking professional legal advice – An HR advisor can alert the business to changing employment law
• Setting up alerts for UK government changes around employment or holiday law for terms like holiday pay zero hours contract
• Regular contract management to check the holiday entitlement is legally correct
• Using automated holiday tracking systems
• Analysing holiday allocations to ensure holidays are being used
• Regularly updating employee handbooks and staff notices
• Ensuring zero hours workers are aware of upcoming bank holidays and how this relates to their holiday accrual

Managing Zero Hours Bank Holiday Pay & Annual Leave For Zero Hours Contract Employees

We haven’t yet touched on one important consideration, which is how employers should handle accrued holiday pay when a zero-hour worker resigns or is terminated.

After all, with zero-hour contracts, work is not guaranteed and can quickly end by either party.

Zero-hour contract work, as we have seen, includes protected holiday days. That means, when the contract ends, even if the worker had no set hours, the employer must pay for any holiday that has been accrued and not taken.

The holiday entitlement for zero hours workers can be given as a payment for their balance as stated under the Working Time Regulations 1998.

The steps are simple.

1. Using an annual leave calculator, take a summary of how much annual leave has been accrued
2. Submit this payment within their last payslip
3. Ensure that this is correctly titled as ‘holiday pay’ to avoid confusion

Zero contract holiday pay is, in this way, treated as it would be for any other employee, as it must be either taken by the worker or given as a payment.

How Avensure Can Support Employers With Zero Hour Contract and Holiday Pay Management

When it comes to zero hour contract holiday pay, it can feel like you’re walking on eggshells, especially if you have workers who work seasonally and sporadically.

It’s essential to get anything around employee rights correct, so for detailed advice specific to your organisation and employment contracts that are compliant with current law and best practice, it’s important to seek professional help.

Perhaps you are worried about tribunal claims or incorrect pay calculations? Let Avensure help you implement watertight policies.

You can contact the Avensure 24 hour advice line to talk to experts who will guide you through any questions big and small around zero hour contract and holiday pay management.

Avensure can also help in general around zero hour employee rules, ensuring you’re not putting your business at risk.

Zero Hour Contract Holiday Pay FAQs

What Are Zero Hour Contract Holiday Pay Rules in the UK?

Employers are legally obliged to offer statutory holiday entitlement for zero hours contractors, part-time and irregular hours workers, which is accrued based on the calculation of 12.07% of hours worked, the equivalent of 5.6 weeks of holiday each year as a minimum based on their hours worked, which begins to accrue straight away.

The pay rules in the UK for irregular hours workers are based on the Working Time Regulations 1998 and are legally protected rights.

Can Employers Roll Up Holiday Pay for Zero-Hour Workers?

Yes, holiday pay can be blended into regular pay, and is applicable to irregular-hours and part-year workers, unless their leave year began on or before 31 March 2024. This is called ‘roll up holiday pay’.

Roll up holiday pay is where an amount for holiday pay is blended into an employees regular payment. Employers must pay it in the same way a payment is usually made, and the payslip must show the roll up as a separate payment.

To contractually change a 0 hours contract and holiday pay clause to be a roll up pay if this has never been done before would require significant HR support to ensure legal compliance, so it’s recommended to seek legal advice.

When Must Employers Pay Accrued Holiday Pay on a Zero-Hour Contract?

Holiday pay for zero-hour workers should be paid when the holiday is taken, or upon the end of the contract. If a holiday is taken, the pay should be given during the period the worker is off.

If the contract comes to an end, employees must make payment for any accrued holiday.

If a roll up holiday is being used, the payment will be shown on a payslip, but the worker will not receive holiday pay during their holiday time off.

Can Employers Refuse Holiday Pay For Zero Hours Employees?

Holiday pay for a holiday that was approved or accrued is legally entitled to be provided. When holiday has been taken, a worker must be paid for this time off.

Employers that fail to pay zero hours workers holiday pay could face an employment tribunal where they would face a range of possible consequences, including compensation or even prosecution.

Employers must ensure that they ensure their obligations to zero hours workers are met with regular HR advice, contract management and legal guidance.

Are Employers Legally Obliged to Grant Holiday Entitlement On A Zero Hour Contract?

Employers are not legally obliged to grant holidays on a zero-hour contract that do not meet with business feasibility. While an employer cannot refuse a worker’s entitlement to statutory holiday pay under the Working Time Regulations 1998, they can refuse a worker’s request to take holiday at a specific time if there’s a valid business reason.

This could be that the worker has insufficient accrued leave, the business has operational needs, or if the proper notice wasn’t given.