Work out statutory holiday entitlement
Full year, new joiners, leavers and bank holidays, for any working pattern.
For workers whose hours change from one pay period to the next, holiday entitlement is not a fixed number of days but a running total built from the hours they actually work. Since 1 April 2024, that total accrues at 12.07% of the hours worked in each pay period, capped at the equivalent of 5.6 weeks, or 28 days, a year ([1]). A worker who puts in 25 hours in a month accrues just over 3 hours of leave for that month ([2]).
Calculating entitlement from hours matters because a growing share of the UK workforce is on casual, zero-hours or term-time contracts where no fixed weekly pattern exists. The method was reset by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, which came into force on 1 January 2024 and reintroduced the 12.07% accrual for these workers after a Supreme Court ruling had unsettled the position ([3]). Getting the calculation right protects both the worker's statutory right and the employer against a claim.
This guide is a step-by-step method for working out holiday entitlement from hours worked: who the rules apply to, how the 12.07% accrual works, how to round it, how entitlement builds during sickness or family leave, and how accrued hours convert into time off.
Key takeaways
- Holiday entitlement for irregular hours and part-year workers accrues at 12.07% of the hours worked each pay period.
- Accrual is credited on the last day of each pay period, and is rounded to the nearest hour.
- The most a worker on the statutory minimum can build up in a year is 5.6 weeks, capped at 28 days.
- During sickness or family leave, entitlement keeps accruing based on average hours over the previous 52 weeks.
- The 12.07% figure sets entitlement, not the pay rate, which is worked out separately.
- Employers must keep reliable records of hours worked, leave accrued, leave taken and leave carried forward.
Why entitlement is measured in hours for some workers
Most workers have their holiday set as a number of days from the start of the leave year. That approach only works where the weekly pattern is stable. For workers whose hours are unpredictable, the law measures entitlement in hours and lets it build up as work is done.
Who counts as an irregular hours or part-year worker
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 define an irregular hours worker as one whose paid hours in each pay period are, under their contract, wholly or mostly variable ([4]). A part-year worker is one who is required to work only part of the year, with periods of at least a week in the leave year when they neither work nor are paid ([5]). Zero-hours staff, casual workers and term-time-only employees typically fall into one of these two categories.
The classification is made in relation to a specific leave year, so a worker's status can change if their contract changes ([6]). Only workers who meet one of these definitions use the hours-based accrual method; those with settled hours continue to receive a fixed entitlement worked out at the start of the year ([7]). Confirming the classification at the point of hiring is the first step in any payroll process for SMEs that employs casual staff.
The 5.6-week cap still applies
Building entitlement from hours does not remove the statutory ceiling. The most an irregular hours or part-year worker on the statutory minimum can accrue in a year is 5.6 weeks, and that figure is capped at 28 days in the same way it is for every other worker ([8]). In practice a heavy year of hours cannot push a worker above the 28-day equivalent.
That cap is the link back to the universal entitlement. The 5.6 weeks is the same floor that applies across the workforce, and the hours-based method is simply a different route to measuring it for workers without a fixed pattern ([9]). An employer offering more than the statutory minimum as a contractual benefit must adjust the accrual percentage upward to match the enhanced allowance ([10]).
The 12.07% accrual method
The mechanism is deliberately simple: multiply the hours worked in a pay period by 12.07% to find the hours of leave accrued for that period. The result is added to the worker's running balance.
Where 12.07% comes from
The percentage is the ratio of statutory leave to working time. A worker who takes 5.6 weeks of holiday works the other 46.4 weeks of the year, and 5.6 divided by 46.4 gives 12.07% ([11]). Applying that percentage to hours worked converts time on the job into the proportionate slice of holiday it earns. Entitlement accrues on the last day of each pay period, so the balance updates every time the worker is paid ([12]).
Because the figure is tied to the statutory 5.6 weeks, it holds for any worker on the minimum regardless of how many hours they end up working ([13]). The table shows the hours of leave accrued for a range of hours worked in a period.
| Hours worked in the pay period | Leave accrued (12.07%) | Rounded to nearest hour |
|---|---|---|
| 25 hours | 3.02 hours | 3 hours |
| 40 hours | 4.83 hours | 5 hours |
| 70 hours | 8.45 hours | 8 hours |
| 100 hours | 12.07 hours | 12 hours |
| 160 hours | 19.31 hours | 19 hours |
Rounding to the nearest hour
Accrued leave is rounded to the nearest hour, rounding up where the part-hour is 30 minutes or more and down where it is less ([14]). A worker who accrues 8.45 hours in a period is credited with 8 hours, because the part-hour of 0.45 is below the half-hour threshold ([15]). A worker who accrues 4.83 hours is credited with 5 hours, because 0.83 rounds up.
Rounding applies to each pay period's accrual as it is credited, not to the annual total, so the convention has to be applied consistently period by period ([16]). Over a year of many small accruals, a reliable payroll system that applies the rounding automatically avoids the drift that creeps into a manual spreadsheet ([17]).
A worked example of building up entitlement
Following a single worker across several pay periods shows how the balance grows. Consider a casual worker paid monthly whose hours vary with demand, on the statutory minimum entitlement.
In a month with 25 hours worked, the worker accrues 25 multiplied by 12.07%, which is 3.02 hours, rounded to 3 hours ([18]). A busier month of 90 hours accrues 10.86 hours, rounded to 11 hours, while a quiet month of 12 hours accrues 1.45 hours, rounded to 1 hour ([19]). The running balance is the sum of each period's rounded accrual.
| Month | Hours worked | Accrued (12.07%) | Rounded | Running balance |
|---|---|---|---|---|
| Month 1 | 25 | 3.02 | 3 | 3 hours |
| Month 2 | 90 | 10.86 | 11 | 14 hours |
| Month 3 | 60 | 7.24 | 7 | 21 hours |
| Month 4 | 12 | 1.45 | 1 | 22 hours |
The worker's entitlement at any point in the year is the total accrued, plus any leave carried forward into the year, less any leave already taken ([20]). This rolling balance is what an employer draws on when the worker books time off. Casual-heavy employers, and the accountants who run their payroll, generally rely on a payroll bureau platform to keep this balance accurate across many workers.
Accrual during sickness and family leave
Entitlement does not stop building when an irregular hours worker is off sick or on a family-related leave. The law protects accrual through these absences using an average of the worker's recent hours.
During any period of sickness absence or statutory leave such as maternity, paternity, shared parental or adoption leave, the worker continues to accrue holiday based on their average hours over the 52 weeks before the absence began ([21]). The employer works out the average weekly hours across that reference period, then applies 12.07% to give the hours of holiday the worker accrues for each week of the absence ([22]).
When building that 52-week average, weeks in which the worker was already off sick or on statutory leave are excluded, but weeks they did not work for any other reason are included ([23]). Where the worker has been employed for fewer than 52 weeks, the employer uses however many weeks are available ([24]). This mirrors the reference-period logic used for casual staff more broadly, explained in the guide to holiday pay for zero-hours contracts.
Harpur Trust v Brazel and why the method changed
The 12.07% accrual method has a contested history that explains why the current rules are drawn so carefully. Before the 2024 reforms, many employers applied 12.07% to all workers without fixed hours, including permanent part-year staff.
In Harpur Trust v Brazel, decided by the Supreme Court on 20 July 2022, a term-time music teacher on a permanent zero-hours contract challenged that approach ([25]). The court ruled that her holiday could not be calculated using 12.07% of hours worked and had to be worked out using the 52-week averaging method, disregarding weeks not worked, even though that gave her proportionally more holiday than a full-year colleague working the same total hours ([26]). The percentage method was held to be unlawful for these workers.
The 2024 legislation responded by restoring 12.07% as a statutory accrual mechanism for irregular hours and part-year workers, resolving the practical problem the case had exposed for leave years starting on or after 1 April 2024 ([27]). The important distinction the reforms preserved is that 12.07% now governs how entitlement accrues, not how much a week of leave is paid, which remains a separate calculation ([28]).
Recording accrued hours and converting them to time off
An accrued balance is only useful if it is recorded accurately and can be drawn down when the worker takes leave. The reforms put a clear record-keeping expectation on employers.
Employers must keep reliable records of hours worked, periods of engagement, leave accrued, leave taken and leave carried forward, so that the running balance can be evidenced at any point ([29]). When the worker books a day or a shift off, the hours of that leave are deducted from the accrued balance, and the separate question of how much to pay for it is answered using the pay rules ([30]). Keeping entitlement and pay as two distinct steps is the single most important discipline in the whole process, and it is exactly the kind of rules-based logic a modern payroll engine is built to run.
Any accrued leave a worker has not taken by the end of the leave year is generally expected to be used within the year, though limited carry-forward is allowed where the worker could not take it because of sickness or family leave ([31]). Where a worker leaves partway through the year, the accrued-but-untaken balance is paid in lieu on termination, using the same running total the employer has maintained across the year ([32]). The way that final figure is prorated is set out in the guide to pro rata holiday.
Work out accrued entitlement instantly
Rather than apply 12.07% and the rounding rule by hand for every worker and every pay period, an employer can size the accrued entitlement with the Moonworkers holiday entitlement calculator, which applies the statutory accrual method to any pattern of hours worked.
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Conclusion
Calculating holiday entitlement from hours worked comes down to one repeated step, applying 12.07% to the hours in each pay period and rounding the result to the nearest hour, with the annual total capped at the equivalent of 5.6 weeks. The method extends through sickness and family leave using a 52-week average of hours, and it keeps entitlement strictly separate from the pay owed when leave is taken. Behind its apparent simplicity sits a decade of case law that the 2024 reforms finally settled.
As casual and flexible working grows, the accrual calculation is moving from a monthly manual task into the systems that already record hours and schedule shifts. When rota and workforce platforms embed UK payroll compliance directly, holiday entitlement updates itself the moment a timesheet is approved, turning a persistent source of error into a background calculation that simply stays right.
Frequently asked questions
How do I calculate holiday entitlement based on hours worked?
Multiply the hours worked in each pay period by 12.07% and round the result to the nearest hour ([33]). A worker who works 25 hours in a period accrues 3 hours of leave, and the balance builds across the year up to the equivalent of 5.6 weeks, capped at 28 days.
Why is the figure 12.07%?
The 12.07% represents statutory holiday as a fraction of working time: 5.6 weeks of leave divided by the 46.4 weeks worked in a year ([34]). Applying it to hours worked converts time on the job into the holiday it earns.
Does holiday keep building up while a worker is off sick?
Yes. During sickness or statutory family leave, an irregular hours worker keeps accruing holiday based on their average hours over the 52 weeks before the absence started, with 12.07% applied to that average ([35]). Weeks already spent off sick or on statutory leave are excluded from the average.
Is the 12.07% method the same as holiday pay?
No. The 12.07% method sets how much entitlement a worker accrues, not how much they are paid for it ([36]). The pay for a week of leave is a separate calculation, based on average pay, and applying 12.07% as the pay rate for a week of leave taken is incorrect.
