Holiday Accrual for UK Employers

Learn what is holiday accrual, how to calculate it for your employees and the current rules involved with annual leave accrual.

First published on Friday, December 17, 2021

Last updated on Monday, January 20, 2025

In the UK workers are entitled to 5.6 weeks of statutory paid holiday. The number of days they are entitled to will differ depending on how many days a week they work.

In the first year of a person’s employment with your business, a holiday accrual system is used to calculate their entitlement.

In this article we explain what holiday accrual is, how to work it out, and how having a leave management system can simplify the entire process.

What is holiday accrual?

A holiday accrual system is typically the ‘standard’ when it comes to calculating holiday. This method simply means that an employee will ‘build-up’ paid time off based on how much time they have worked. The standard is that employees will start accruing their annual leave entitlement from the first day they start working for a business.

How to calculate holiday accrual

This will begin to accrue by one-twelfth of their year’s entitlement each month.

For example,

If an employee, entitled to 28 days per year, has worked 5 days per week for 3 months, they will have accrued 3/12 or 1/4 of their annual leave entitlement.

Therefore, they would be entitled to 28 divided by 4 = 7 days of annual leave.

As they continue to work, they will accrue a proportion of their annual entitlement on a monthly basis.

For example, after 6 months of working, an employee would have accrued ½ of their annual entitlement.

Holiday accrual for irregular hours workers

Where these rules do not apply is when an employee is working irregular hours. Such as zero-hour contract workers or irregular shift workers.

Using a specific accrual system, they will be entitled to 12.07% of the hours worked in a pay period. If this number is 0.5 or more of an hour, then the total must be rounded up to the nearest hour. For example:

If an employee worked 30 hours in the month of June, and they are paid monthly. The employee would have 4 hours of annual leave to take in their next pay period (30 x 12.07 ÷ 100 = 3.621).

What happens if an employee leaves their job role?

If an employee has handed their notice in during the year, they may be able to use some of the holiday they have accrued to take time off work during their notice.

However, they may not have any annual leave entitlement left to take. This will all depend on how much time they have worked within that year, how much annual leave they have accrued and how much they have already taken.

If this worker has annual leave remaining, they can take ‘payment in lieu’ rather than taking the statutory leave they are entitled to. As an employer you are legally obligated to provide this and should include details of how and when this will be done in your employment contracts.

Holiday carry-over

If, overtime, an employee continues to accrue holiday but does not take a day off, they may end the year with annual leave entitlement remaining. Whether or not they can carry this over has been explained in our article about Carrying over annual leave.

Simplify leave management with automatic holiday entitlement calculations

Annual leave management is sometimes a confusing element of your HR processes. Particularly when you have to use different calculations and formulas depending on how many hours your employees have worked.

The best way to simplify this process is to consider a leave management system.

The BrightHR staff holiday planner has a range of features, including automatic annual leave calculations. Accurately calculating how much annual leave each of your employees has accrued overtime.

Other features include:

  • Instant notifications of staff holiday clashes

  • Advice on annual leave employment laws

  • Approval of holiday requests from a mobile or desktop device

  • A single-window view of your entire team’s holiday calendar

To see BrightHR in action and to discover how a staff holiday planner can simplify your annual leave management, book a free demo today. A member of our team will walk you through our HR software, detailing the many innovative, simple features that will save your busy time and money! Get in touch with our team for more information.


Lucy Cobb

Employment Law Specialist

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