Fifty-two paid weeks, not fifty-two calendar weeks
Where somebody's pay varies, a week's holiday pay is the average of their last 52 weeks of pay. The word doing the work in that sentence is paid. Any week in which they earned nothing is skipped, and you go back a week further to find one that counts, up to a limit of 104 weeks.
Averaging over the last 52 calendar weeks including the empty ones is how holiday pay most often ends up underpaid in the UK. It is an easy mistake because the wrong method is the one a spreadsheet does by default, and the answer it produces looks entirely reasonable.
What it costs, in practice
Take term-time staff: 39 weeks paid at £400, 13 weeks of school holidays at nothing. The correct figure is £400 a week, because the 13 empty weeks are skipped and the calculation reaches back into the previous year to find 52 paid ones.
Average the last 52 calendar weeks instead and you get £300. That is a quarter off every day of holiday, every year, and it never shows up as an obvious error on a payslip. It just looks slightly low.
Reduced is not the same as nothing
Only weeks with no pay at all are skipped. A short week, a week on statutory sick pay, a week with one shift, all count at whatever was actually paid. The rule exists to stop weeks of no work dragging the average down, not to strip out every week below par.
And if there are fewer than 52 paid weeks inside the 104-week window, you use however many there are. You do not make the number up to 52 with zeros.
What counts as pay
More than basic. Following Bear Scotland and the cases after it, holiday pay has to reflect normal remuneration, which includes regular overtime whether guaranteed or not, commission, shift and unsocial hours premiums, and regular allowances tied to the work.
Strictly that applies to the four weeks under regulation 13. The additional 1.6 weeks under regulation 13A can lawfully be paid at basic. Most employers pay all 5.6 the same way because running two rates through payroll is more trouble than the difference is worth.
Genuinely one-off payments are left out: a discretionary bonus, an expense reimbursement, a redundancy payment. The test is whether it is normally part of what they earn for doing the job.
Which workers this is for
Anyone whose pay varies week to week. Piece workers, shift workers on rotating premiums, staff on commission, and anyone doing regular overtime. It also sets the day rate used when untaken holiday is paid out on leaving.
Irregular hours and part-year workers are on a different footing since April 2024: they accrue leave at 12.07% of hours worked, and the reference period is used to value it rather than to size it.
Nothing here is legal advice, and a contract can always be more generous than the statutory minimum. Where a page cites a regulation it names it so you can check it.
Fifty-two weeks of pay is a lot to hand over
Pay figures stay on the page and are discarded when you close the tab. There is no account and nothing is uploaded, which matters when the numbers are somebody's wages.
Common questions
How is holiday pay worked out when pay or hours vary each week?
As an average of the last 52 weeks in which something was paid, skipping any week with no pay at all and looking back further to find one that counts, up to a limit of 104 weeks.
Why can I not just average the last 52 calendar weeks?
Because it is a common way holiday pay ends up underpaid. For term-time staff paid £400 for 39 weeks with 13 weeks of school holidays at nothing, averaging the last 52 calendar weeks gives £300 instead of the correct £400, a quarter off every day of holiday.
Does a week of statutory sick pay or a short week get skipped from the average?
No. Only weeks with no pay at all are skipped. A short week, a week on statutory sick pay, or a week with one shift all count at whatever was paid.
What counts as pay for this calculation, just basic salary?
More than basic. Following Bear Scotland and the cases after it, normal remuneration includes regular overtime whether guaranteed or not, commission, shift and unsocial hours premiums, and regular allowances tied to the work.
Are one-off payments such as a bonus included in the average?
No. Genuinely one-off payments are left out, such as a discretionary bonus, an expense reimbursement or a redundancy payment. The test is whether it is normally part of what someone earns for doing the job.
Who does the 52-week averaging rule apply to?
Anyone whose pay varies week to week: piece workers, shift workers on rotating premiums, staff on commission, and anyone doing regular overtime. It also sets the day rate used when untaken holiday is paid out on leaving.
Are irregular hours and part-year workers calculated the same way?
No. They have been on a different footing since April 2024: they accrue leave at 12.07% of hours worked, and the reference period is used to value that leave rather than to size it.