Holiday
Overtime, commission and allowances in holiday pay
Which payments on top of basic pay must follow you on holiday, which may be left out, and how the average is taken.
Checked by Radif Partners · Editorial policy · Method and sources
Holiday pay is meant to match what you normally earn, not just your basic rate. Since 1 January 2024, regulation 16(3ZA) of the Working Time Regulations lists the payments that must be included in a week’s holiday pay for the first 4 weeks of statutory leave in Great Britain: payments, including commission, intrinsically linked to tasks your contract obliges you to do; payments for professional or personal status, such as seniority, length of service or qualifications; and other payments, such as overtime, regularly paid in the 52 weeks before the leave. The remaining 1.6 weeks may be paid at basic pay for regular-hours workers, while irregular-hours and part-year workers are paid at the full normal rate for all leave. Variable elements are averaged over the last 52 weeks in which you were paid, looking back up to 104 weeks. One-off bonuses and expenses are not usually included.
What regular overtime adds to a year of holiday pay
Overtime and commission in your holiday pay
£480
| 28 days, extras for the first 4 weeks only | £3,168 |
| 28 days at basic pay only (unlawful) | £2,688 |
| 28 days, extras on every week | £3,360 |
The three categories, in plain words
- Payments tied to the job you must do (regulation 16(3ZA)(a)): commission on sales you are employed to make, shift premiums, productivity payments for the work in your contract.
- Payments for who you are at work (16(3ZA)(b)): seniority or long-service increments, qualification allowances, professional status payments.
- Other regular payments (16(3ZA)(c)): overtime and similar payments regularly made in the 52 weeks before the leave, whether or not the overtime was compulsory.
These categories codify years of tribunal and court decisions into the regulations. They apply to the 4 weeks of basic leave under regulation 13 and to all leave of irregular-hours and part-year workers under regulation 15B. The additional 1.6 weeks under regulation 13A can still be paid on basic pay for regular-hours workers, which explains why the same worker can see two daily rates on a holiday payslip.
What it means over a year
The table prices a full year of statutory leave, 28 days, for three five-day workers, with their extras averaged over 52 paid weeks. “Required minimum” applies the normal rate for 4 weeks and basic pay for 1.6 weeks; “basic only” is the unlawful practice of leaving the extras out entirely.
| Worker | Basic week | Extras a week | Required minimum for the year | Basic only |
|---|---|---|---|---|
| Sales adviser, commission on every sale | £450 | £175 | £3,220 | £2,520 |
| Care worker, rostered overtime most weeks | £520 | £120 | £3,392 | £2,912 |
| Engineer, seniority allowance and occasional call-outs | £700 | £25 | £4,020 | £3,920 |
For the sales adviser, leaving commission out of holiday pay costs £700 a year. Many contracts pay the normal rate for all 5.6 weeks anyway, which is simpler to administer and is always allowed.
Taking the average
For anyone whose pay varies, regulation 16 points to sections 221 to 224 of the Employment Rights Act 1996 with the reference period changed from 12 weeks to 52. Weeks in which you received no pay are skipped and earlier weeks used instead, going back no more than 104 weeks. A worker employed for less than 52 complete weeks uses the complete weeks they have. Monthly-paid staff convert each month to an hourly rate, then to weeks, as GOV.UK describes (a week’s pay explained). The holiday pay calculator takes a yearly total of extras and the number of paid weeks.
Checking your own holiday pay
Take a payslip for a week of holiday and one for an ordinary week. Divide the holiday pay by the days of leave to get the daily rate actually paid. Then add up your overtime, commission and allowances over the last 52 paid weeks, divide by the number of those weeks and by your working days a week, and add the result to your basic daily rate. If the first figure is below the second for leave within your first 4 weeks of the year, the extras are missing. Raise it in writing with payroll, quoting regulation 16(3ZA); unpaid holiday pay can be claimed as an unlawful deduction from wages if it is not corrected, within the time limits Acas explains.
What is usually left out
GOV.UK says the normal rate does not usually include bonus payments. A discretionary annual bonus, a one-off retention payment or a profit share tied to company results rather than your own tasks falls outside the three categories. Reimbursed expenses are not pay at all. Benefits in kind, such as a company car, continue during leave under the contract rather than through holiday pay.
Northern Ireland and older leave years
The categories were written into the Great Britain regulations by SI 2023/1426, which does not extend to Northern Ireland. There, the duty to reflect normal pay in holiday pay comes from case law applied to the Northern Ireland regulations rather than from a written list, and Northern Ireland courts have their own decisions on overtime. For holiday taken before 1 January 2024 in Great Britain, the same case law, not regulation 16(3ZA), decides old claims. For a dispute about either, Acas or the Labour Relations Agency can help before a tribunal claim.