Holiday policy

Holiday is where employment law meets arithmetic, and the regulations were rewritten in 2024 after a decade of case law: accrual for irregular hours and part-year workers, rolled-up holiday pay, carry-over where an employee could not take leave, and holiday pay that includes commission and regular overtime. The policy has to state the entitlement and the holiday year, the request and notice rules the regulations set, the carry-over the law requires, the bank holiday arithmetic for part-timers, the method for staff whose hours vary, and the position on sickness and leaving. I draft the policy for the employer as part of the handbook and core policies for a fixed fee of £995, delivered in five working days.

Who this is for

Employers in England and Wales with full-time, part-time, shift and variable hours staff, and employers whose holiday arrangements have never been checked against the amended regulations.

What matters in a holiday policy

The statutory minimum and what the employer adds

The Working Time Regulations 1998 give every worker five point six weeks' paid leave a year (four weeks under regulation 13 and one point six weeks under regulation 13A, which the regulations treat differently for carry-over and pay), capped at twenty-eight days for a full-time worker and including bank holidays unless the employer gives them in addition, and the policy should state the entitlement in days or hours, what the employer adds above the minimum and on what terms, the service-related increases if any, and the written particulars under section 1 of the Employment Rights Act 1996 that must state holiday and holiday pay; the policy should distinguish the statutory leave from the contractual addition because different rules apply to each.

The holiday year, requests and the notice rules

The policy should set the holiday year, how leave is requested and approved, the order of priority at popular times, the periods when leave is restricted, and the default notice rules under regulation 15 of the Working Time Regulations 1998 (a worker gives notice of twice the leave requested, the employer may refuse by counter-notice of the same length as the leave, and the employer may require leave to be taken on notice of twice the period) or the different rules the contract substitutes; a holiday policy that refuses requests without a mechanism, or requires leave to be taken without notice, is in breach however reasonable the business reason.

Carry-over and the cases where the law requires it

The policy should state the employer's rule on carry-over of contractual holiday and should reflect the carry-over the amended regulations require for statutory leave: leave a worker could not take because of sickness carried over for up to eighteen months, leave not taken because of maternity or other family leave carried over, and the four weeks carried over where the employer failed to give the worker the opportunity to take it, to encourage them, or to tell them it would be lost, with a rule that leave taken is deemed to be the statutory leave first; a policy that says all untaken leave is lost at the year end is wrong in each of those cases.

Bank holidays, part-timers and the arithmetic

The policy should say whether bank holidays are included in the entitlement or added, how they are treated for staff who do not work the days they fall on, and how part-time workers receive a pro rata share under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, in hours, so that an employee who never works Mondays is not short-changed and one who always does is not over-rewarded; the policy should set out the calculation once so that managers do not do it differently.

Irregular hours, part-year workers and rolled-up holiday pay

For irregular hours and part-year workers the amended regulations provide that leave accrues at a stated percentage of hours worked in each pay period, and allow the employer to pay rolled-up holiday pay as an uplift on each payslip shown separately, instead of paying when leave is taken, where the policy and the contract provide for it; the policy should state which method the employer uses for which staff, how accrued leave is recorded and taken, and how holiday pay is calculated for staff whose pay varies (over the reference period the regulations set), because unpaid or underpaid holiday for variable hours staff is the claim that follows every departure.

Holiday pay, sickness and leaving

The policy should state that holiday pay for the statutory four weeks reflects normal remuneration including regular overtime, commission and allowances as the amended regulations provide, that a worker who falls sick during leave may convert the leave to sickness absence on the evidence the policy requires, that accrued untaken leave is paid on termination under regulation 14 of the Working Time Regulations 1998 (and over-taken leave recovered only with the written consent section 13 of the Employment Rights Act 1996 requires), and that the employer may require leave to be taken during notice or garden leave on the required notice; the policy should also address holiday during family leave and long-term sickness, which continues to accrue.

What it costs

Staff handbook and core policies, £995. Five working days.

Employment contract, £595. One template you can reuse for a grade of staff. Five working days.

Buying online forms the engagement on payment. The scope is what the employment contracts and handbooks page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how you employ people
• Restrictive covenants drafted at a scope a court will uphold
• Confidentiality and intellectual property provisions that put ownership where it belongs
• The statutory particulars, so the document does the job section 1 of the Employment Rights Act 1996 requires it to do
• Flexibility clauses where you genuinely need them, drafted to survive challenge
• Core policies: disciplinary, grievance, sickness absence, equal opportunities, data protection and, increasingly, AI use
• One round of amendments

What is not included

• Acting for employees
• Employment tribunal representation
• Payroll, pensions auto-enrolment and tax
• Immigration and sponsor licence work
• Day to day HR handling, disciplinaries, grievances and redundancy processes

Questions I am often asked

Can we have a use-it-or-lose-it rule?

For contractual holiday above the minimum, yes. For statutory leave, only where the employer gave the worker the opportunity to take it and told them it would be lost, and never where sickness or family leave prevented it. The policy states the exceptions.

How do we work out holiday for staff on zero hours?

Accrual at the stated percentage of hours worked each pay period, with rolled-up holiday pay shown separately on the payslip where the employer chooses it and the contract provides. The policy states the method.

Does holiday pay include commission?

For the statutory four weeks, yes, along with regular overtime and allowances, calculated over the reference period. A policy that pays basic salary only underpays.

Related guidance and services

• Employment contracts and handbooks, £995, the service this page describes
• Consultancy and contractor agreements, £595
• Employment contract for a part-time employee
• Employment contract for a casual worker

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.