Complete guide to zero-hours contract holiday pay & entitlement

4 min read  |   30 October, 2023   By Sarah Benstead

Two restaurant managers look at a laptop in a restaurant. One is sitting, the other standing. Both are smiling.

There are around 1.18 million workers in the UK on zero-hours contracts.

Whether you run your own business, or are responsible for all things HR and employ people on zero-hours contracts, it’s important to understand and map out holiday pay & entitlement.

Luckily, here at Breathe, we've put together an easy guide to help you calculate holiday pay for any staff who are on zero-hours contracts. 

You can also find out more about zero-hours contracts in our comprehensive guide. 


Are staff on zero-hours contracts entitled to holiday leave and pay?

How to calculate zero-hour contracts holiday entitlement?

How do I calculate holiday pay for my zero-hours staff?

How can HR software help?


Are staff on zero-hours contracts entitled to holiday leave and pay?

The simple answer is, yes.

Zero-hours contract workers have the same legal rights as employees on other contracts. The only exception is when there is a break in an employee's working pattern.

If this occurs, it could affect anything that accrues with time - such as the number of days of holiday entitlement.

Just like an employee on a permanent fixed contract, a zero-hours worker is entitled to take paid leave and must also be paid any leave owing to them when their employment contract is terminated.

How to calculate zero-hours contract holiday entitlement?

Here's the numbers bit. But bear with us - it's not too tricky.

The Supreme Court recently ruled that permanent employees (and workers) who only work part of the year are still entitled by law to 5.6 weeks of holiday per year- regardless of how many hours they've worked. 

Holiday entitlement can no longer be pro-rated for permanent part-year or zero-hours workers to reflect the number of weeks the employees have worked in a year. There's an automatic entitlement of 5.6 weeks (or 28 days) in a year. 

That's 28 days for a 5-day-a-week worker. The same goes for employees who work 6 days a week, as it's capped at 28 days. 

It's completely up to you to decide if paid public holidays are counted as part of a worker’s leave entitlement, or whether you give these days in addition to the holiday entitlement.

Annual leave starts to accrue as soon as the employee starts working for you. You'll also have details of your “leave year” in place. For most companies, this runs from 1st January to 31st December.

As you're probably aware, for employees with fixed-time contracts leave is accrued monthly in advance, at the rate of one-twelfth of their annual entitlement.

Need help calculating holiday entitlement for your zero-hours contract employee? Try our Holiday Entitlement Calculator to get started.


How do I calculate holiday pay for my zero-hours staff?

Employees are entitled to receive zero-hours contract holiday pay. They are also eligible for payment in lieu of any untaken statutory leave entitlement on the termination of their employment.

To calculate the rate of holiday pay where you have workers without normal working hours, you can take an average of their pay over the preceding 12 weeks, counting only the weeks in which the employee was paid. 

For any weeks where there were no hours worked, and therefore no pay received, then those weeks should be replaced by the most recent previous weeks where pay was earned.

Breathe’s staff holiday planner & booking system provides everyone with the knowledge they need to book their holidays with ease, whether full time or on a zero-hours contract.

Sign up for a 14-day free trial today and see the difference our people management software has on your business.


How can HR software help?

HR software like Breathe takes the headache out of holiday management.

The intuitive holiday-management feature can accommodate employees with a variety of working patterns - such as those with zero-hours contracts - meaning you can put the calculator away and focus on developing your people and growing your business.

To find out more, book one of our regular webinar tours of Breathe, or start your free 14-day trial today.



Author: Sarah Benstead

Sarah is a Product Marketing Specialist here at Breathe. Always innovating, she loves writing about product releases in an engaging & informative way. When she's not coming up with new ideas, she enjoys long walks with her dog, Clifford.

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