0 hours contract holiday pay is where UK employers make their most expensive quiet mistake. The 12.07% shortcut most owners rely on is lawful for one narrowly defined group of workers only. Even then, it applies only to leave years starting on or after 1 April 2024. Apply it to anyone else and every payslip adds to an underpayment claim you cannot see building. This guide explains who gets holiday pay, which calculation applies to which worker, and the rolled-up pay rules the 2024 reforms brought back. This guide covers England, Scotland and Wales. Northern Ireland has separate rules: the 2024 reforms and the two-year back-pay cap do not apply there, and rolled-up holiday pay remains unlawful. 

Do staff on a 0 hours contract get holiday pay? 

Yes. Almost everyone classed as a worker is legally entitled to 5.6 weeks of paid holiday a year under the Working Time Regulations 1998. GOV.UK confirms the entitlement covers agency workers, irregular hours workers and part-year workers. Zero-hours staff sit squarely inside that protection. 

Employment status decides, not the contract label 

The words at the top of the contract do not control the right. Holiday entitlement attaches to worker status. Calling someone casual, bank staff, or "as and when" changes nothing. Ask two questions instead. Does the person do the work personally? Are they genuinely in business for themselves, with you as their customer? If the first answer is yes and the second is no, they are almost certainly a worker. The entitlement follows automatically. 

This is the first place owners go wrong. They treat the zero-hours label as a switch that turns holiday rights off. It is not, and it never has been. Status is decided on the facts of the relationship, so if you are unsure where a particular person sits, take advice before you rely on the label. 

The 5.6 weeks every worker gets 

The statutory minimum is 5.6 weeks per leave year. For a five-day-a-week worker, that is 28 days, which is also the statutory cap. For someone on fixed part-time days, the sums stay simple: three days a week times 5.6 gives 16.8 days. Bank holidays carry no separate right of their own. An employer can count them toward the 5.6 weeks if the contract says so. 

A zero-hours worker breaks that arithmetic. Their weeks are not the same size, so a "week" of leave has no fixed shape. The law solves this by converting entitlement into hours, accrued as the person works. That conversion is where 12.07% comes from, and where the rules got rewritten in 2024. For the wider picture across your whole team, our guide to annual leave rights for employers and employees covers entitlement, bank holidays and leave-year design. 

How zero-hours contract holiday pay is calculated 

Two systems now run side by side. Which one you must use depends on the type of worker, not on which you prefer. Get the classification right first. Every other decision hangs off it. 

The 12.07% accrual method explained 

For leave years starting on or after 1 April 2024, irregular hours workers and part-year workers accrue holiday at 12.07% of the hours they work in each pay period. The GOV.UK holiday pay reform guidance sets out the method and the worked examples. 

The percentage is not arbitrary. A year holds 52 weeks. Take away the 5.6 weeks of statutory leave and 46.4 working weeks remain. Divide 5.6 by 46.4 and you get 12.07%. In other words, for every hour worked, a worker earns about seven minutes of paid leave. 

The accrual is calculated per pay period, in hours. As an illustration only: a monthly-paid worker who works 100 hours in the month accrues 12.07 hours, which rounds down to 12. The rounding rule is set by the guidance: round down where the leftover fraction is under 30 minutes, round up to the next whole hour where it is 30 minutes or more. 

Two details matter in practice. First, if the contract gives more than the statutory 5.6 weeks, 12.07% is too low; the percentage must be recalculated from the contractual entitlement. Second, accrual applies from day one of employment. There is no waiting period. 

Accrued hours are then booked and taken like any other leave. If you do not use rolled-up pay, you pay for the leave when the worker takes it, based on the average of their total pay across the previous 52 paid weeks. Both payment routes are lawful for this category. Choose one, write it into the contract, and apply it consistently to everyone it covers. 

Who counts as an irregular hours or part-year worker 

This is the gate everything else swings on, and the definitions are tighter than most owners assume. 

An irregular hours worker is someone whose contracted hours in each pay period are, under the terms of the contract, wholly or mostly variable. A genuine zero-hours contract fits: no guaranteed hours, work offered and accepted as it arises. GOV.UK's own example is a hospitality worker on a casual contract whose weekly hours always change. 

A part-year worker is someone whose contract requires them to work only part of the year, with at least a week in the leave year when they are not required to work and are not paid. Seasonal staff and some term-time roles fit here, even where their hours during the working season are fixed. 

Now the trap. A worker on a rotating but fixed pattern, say 15 hours one week and 20 hours the next, is not an irregular hours worker. The hours vary, and they are still set in advance by the contract. GOV.UK uses exactly this example to show who falls outside the definition. Variation the contract prescribes is not the same as variation the contract permits. 

There is a second, quieter trap. The definition looks at the terms of the contract, and a tribunal can look at what happens in reality. A contract that says "hours wholly variable" while the rota shows the same 20 hours every week for two years invites the argument that the true agreement is regular hours. If the paper and the practice tell different stories, do not assume the paper wins. 

What changed in the 2024 holiday pay reforms 

The 12.07% method was never in the original Working Time Regulations. It was a payroll convention, borrowed from old ACAS guidance and applied by habit across the country. 

In July 2022 the Supreme Court ended that habit. In Harpur Trust v Brazel, a term-time music teacher on a permanent contract argued her holiday pay could not be capped at 12.07% of earnings. The court agreed. Part-year workers on permanent contracts were entitled to the full 5.6 weeks, paid on averaged earnings, even where that produced a higher rate than full-year colleagues. The 12.07% shortcut became unlawful for that group overnight. 

The Government then rewrote the framework. The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 created the statutory definitions of irregular hours and part-year workers. For those two categories, and for leave years starting on or after 1 April 2024, the regulations restored 12.07% accrual and legalised rolled-up holiday pay. 

Here is the boundary in one line. Inside the post-2024 irregular hours and part-year category, 12.07% is the lawful method. Outside it, the shortcut is unlawful, exactly as Brazel left it. There is no middle ground, and using the method you have always used is not a defence. 

Rolled-up holiday pay: lawful again, with conditions 

What rolled-up holiday pay means 

Rolled-up holiday pay means adding an uplift to every payslip to cover holiday pay as it accrues, instead of paying it when the worker takes leave. For years the practice was unlawful, because European case law said paying holiday pay through the year discourages workers from taking the rest the entitlement exists to protect. 

The 2023 Regulations changed that position for the defined categories. For irregular hours and part-year workers, in leave years starting on or after 1 April 2024, rolled-up holiday pay is a lawful option. ACAS explains the method alongside the standard alternative. For everyone else, it remains unlawful. The category test gates the payment method the same way it gates the accrual method. 

The payslip and pay period rules you must follow 

Rolled-up pay is conditional, and the conditions do real work. To use it lawfully you must: 

1. Calculate the uplift as at least 12.07% of the worker's total pay in the pay period. Total pay, not basic pay, so regular overtime and similar payments count. 
2. Show the amount as a separate, clearly marked item on each payslip. 
3. Pay it in the same pay period the work was done, not held back to a later date. 
4. Pay it on top of normal wages, which must themselves meet at least the National Minimum Wage. 

Before switching, check the contract. Moving an existing worker onto rolled-up pay can amount to a contract variation, which needs agreement, and workers should be told before the change lands on a payslip. Agency workers must have the arrangement recorded in their Key Information Document. 

Why rolled-up pay is not a free pass 

Three cautions before you roll it out. 

First, the category test still applies. Rolled-up pay for a worker who is not an irregular hours or part-year worker is unlawful, however tidily it is itemised. 

Second, the money changes and the leave does not. The worker keeps the right to take 5.6 weeks off. Rolled-up pay means the time off is already paid for when they take it, and a worker who never takes leave is a warning sign a tribunal will read against you. Encourage the time off. Rest is what the entitlement is for. 

Third, itemisation is a condition, not a courtesy. An owner who quietly folds 12.07% into the hourly rate has no payslip line to point to. In a dispute, that reads as holiday pay never paid at all, and the whole saving unravels into a liability. 

The 52-week reference period for everyone else 

When you cannot use 12.07% 

If a worker falls outside the irregular hours and part-year definitions, the accrual shortcut and rolled-up pay are both off the table. Their entitlement is the ordinary 5.6 weeks, taken as leave and paid when taken. 

The group this catches most often is the zero-hours-in-name-only worker. The contract promises nothing, and the rota delivers the same shifts every week. If the terms, read honestly against the practice, amount to regular hours, the safe course is to treat the worker under the standard rules. The saving from arguing otherwise is small. The downside is a back-pay claim. 

For workers with regular hours and fixed pay, a week of holiday is paid at the normal week's wage. The complexity arrives where pay varies, through commission, overtime or shift patterns. That is the job of the reference period. 

How the averaging works 

To pay a week of holiday for a worker whose pay varies, average their pay over the last 52 weeks in which they were paid for work. Weeks with no pay for work are skipped, and the search backwards stops at 104 weeks. The GOV.UK guidance sets out the mechanics, including what to do for new starters without 52 weeks of history. 

The averaging is simple in principle and tedious in practice, which is why it fails through inattention rather than misunderstanding. Payroll needs week-by-week records of hours and pay to do it properly. Under the Employment Rights Act 2025, records demonstrating holiday entitlement and pay compliance must be kept for six years, a duty phasing in from April 2026, and failure is a criminal offence. Our guide to annual leave calculators for SMEs covers the tools that take the manual work out of tracking entitlement and averages. 

Common zero-hours holiday pay mistakes that cost employers 

Three patterns account for most zero-hours holiday pay failures. Each one runs silently until a claim lands, and each is cheap to fix once it has been named. 

Using 12.07% for the wrong type of worker 

The most expensive version of this mistake has no visible trigger. The method was set up years ago, it ran through every payroll cycle since, and nothing ever flagged it. Then a worker resigns, speaks to an adviser, and the underpayment surfaces as an unlawful deduction from wages claim. 

A tribunal can look back at a series of underpayments for up to two years before the claim, under the Deduction from Wages (Limitation) Regulations 2014. One worker, a modest weekly shortfall, two years of pay periods: the arithmetic is unpleasant. Multiply it across a casual workforce that all sat on the same miscalculated method and the exposure scales with the headcount. 

Paying holiday at basic rate when overtime or commission applies 

Holiday pay is not always basic pay. For workers under the standard rules, at least four of the 5.6 weeks must be paid at the worker's normal rate, which includes regular overtime, commission and similar recurring payments. The remaining 1.6 weeks may be paid at basic rate. For irregular hours and part-year workers, the position is stricter still: all their statutory holiday pay is based on total pay, whether rolled up or averaged over 52 weeks. 

An owner who pays every week of holiday at bare basic rate, while staff regularly earn overtime, is underpaying in plain sight. This error compounds the classification error, and both feed the same two-year window. 

One more final-pay point. A zero-hours worker who leaves with accrued, untaken holiday must have the balance paid with their final pay. Under a rolled-up arrangement it has usually been paid already, which is one more reason the separate payslip line earns its keep. 

Letting copied contract templates fall out of date 

Most zero-hours contracts in circulation were downloaded, borrowed or copied years ago. A template drafted before April 2024 knows nothing of irregular hours definitions, accrual in hours, or the conditions on rolled-up pay. It does not break visibly. It sits in the drawer while the law moves, and the business becomes non-compliant without any event marking the moment. The trigger is the absence of a trigger. 

If your zero-hours contracts have not been reviewed since the reforms, they were written for a legal regime that no longer exists. And if nobody inside the business owns questions like this one, that is a capacity gap rather than a paperwork gap. Our guide to HR outsourcing for small businesses sets out what owning it properly looks like at SME scale. 

Is your zero-hours holiday pay building a claim? 

You now know the rules. What most owners cannot see is whether their own payroll practice matches them, because holiday pay errors run silently until a worker claims or the Fair Work Agency, which has enforced holiday pay since April 2026, looks first. The free HR Health Check lets you know where your HR foundations stand in under a minute, holiday pay practices included, and grades your risk Red, Amber or Green. Take the free HR Health Check before the two-year clock does the deciding for you.