Rolled-up holiday pay

Rolled-up holiday pay, also known as rolled-up annual leave pay, refers to a method of calculating and paying statutory holiday pay in accordance with the Working Time Regulations 1998 (WTR) and subsequent amendments.

In essence, rolled-up holiday pay involves combining an employee’s basic hourly rate or salary with their holiday pay entitlement into one single payment. This means that instead of receiving two separate payments - one for regular hours worked and another for holiday hours taken - the employee receives a single payment that includes both their basic earnings and their holiday pay.

To calculate rolled-up holiday pay, employers typically add an amount equivalent to the statutory minimum weekly rate of holiday pay (currently £29.50 per week) to the employee’s normal pay for each week worked. This additional amount is then “rolled up” into the employee’s regular pay, so that they receive a single payment that includes both their basic earnings and their holiday pay entitlement.

For example, if an employee earns £500 per week and has 28 days’ annual leave (which equates to approximately 5.47 weeks of holiday pay), their rolled-up holiday pay would be calculated as follows:

• Basic weekly pay: £500
• Holiday pay entitlement: £29.50 x 5.47 = £161.35
• Rolled-up weekly pay: £500 + £161.35 = £661.35

By rolling up holiday pay, employers can simplify their payroll processes and avoid the need to make separate payments for holiday hours taken. However, it’s essential to note that rolled-up holiday pay must still be calculated in accordance with the WTR and any applicable collective agreements or employment contracts.

It’s also worth noting that rolled-up holiday pay is not the same as “inclusive” holiday pay, which involves including holiday pay within an employee’s basic hourly rate. Rolled-up holiday pay is a specific method of calculating and paying statutory holiday pay, whereas inclusive holiday pay is a different approach to incorporating holiday pay into an employee’s regular earnings.

AceRota’s automated calculations can ensure that employees’ holiday entitlement is correctly rolled up into their annual leave balance, thereby avoiding underpayment and ensuring compliance with relevant employment laws.