Should overtime be included in your holiday pay?

A worker can have the correct number of holiday hours but be paid the wrong rate for them. Equally, a correct rate does not settle whether the leave balance is right. Check both calculations separately.

For regular hours, paid leave is often measured against the normal working pattern. Working extra hours does not automatically mean every overtime hour creates an extra leave-day entitlement. Qualifying GB irregular-hours workers use a separate accrual method.

Use the entitlement guide for time off and the irregular-hours guide for the pattern-specific percentage and payment methods.

GB guidance identifies payments linked to contractual tasks, such as commission; payments for professional or personal status, such as seniority or qualifications; and payments such as overtime that have regularly been paid during the previous year.

Do not decide solely from whether an overtime shift was labelled voluntary. The actual pattern and whether the payment forms part of normal remuneration matter. Ask the employer which components it included and why.

For regular-hours workers, the relevant normal-pay components must be included for at least four weeks of statutory leave. The additional 1.6 statutory weeks can use basic pay. Some employers pay the more generous normal rate for all leave; check the policy rather than assuming that everyone has the same arrangement.

Suppose a worker's normal basic weekly pay is £400 and the applicable reference calculation establishes another £100 of qualifying normal overtime. For a holiday week that must be paid at normal remuneration, the gross amount is £500, rather than £400.

Illustration of a relevant normal-pay holiday week

Component	Gross
Basic weekly pay	£400
Established qualifying normal overtime	£100
Relevant holiday week's pay	£500

The £100 difference is before tax, NI, pensions or loans. This example assumes the overtime component has already been established under the applicable method. It does not prove that every holiday week or every occasional overtime payment receives the same treatment.

GB calculations can use 52 paid weeks, with a maximum 104-week lookback to find the relevant history. Fewer available eligible weeks can require a shorter reference. A spreadsheet containing the last twelve calendar months is not automatically the same as the required complete pay weeks.

The treatment of holiday pay within that history differs by pattern. Current Acas guidance says to exclude holiday pay in the fixed-hours/variable-pay calculation, while explaining that holiday pay is included for irregular-hours and part-year workers. Statutory-absence and unpaid weeks also need the correct method.

Ask payroll for the dates, counted weeks, pay components and exclusions. Do not insert zero-pay weeks or remove every holiday week by habit. A proper comparison requires the actual classification and records.

Under the applicable GB rules, irregular-hours and part-year workers' holiday is paid at normal remuneration. Eligible workers may instead receive a permitted separately identified rolled-up amount. The regular-hours four-week/1.6-week distinction must not be pasted onto every irregular arrangement.

Northern Ireland's published guidance uses a 12-week variable-pay reference and does not permit rolled-up holiday pay. It also describes overtime, commission and other normal remuneration in holiday pay. Follow that route for an NI contract rather than applying a GB formula.

Sector terms can add rights or require a specialised method. Scottish agricultural workers covered by the sector legislation should use the Scottish Government guidance. An employer can also offer better contractual holiday pay than the minimum.

Find whether the employer shows ordinary salary plus a holiday adjustment, a separate holiday-pay line or an inclusive salary amount. Ask which payment covers the leave. Adding the full normal salary to a holiday line that already replaces it would count the same time twice.

Then reconcile gross pay before judging the amount in the bank. A changed code, bonus, pension or loan deduction can alter net pay without changing the holiday-pay calculation. The two-payslip comparison helps identify the contributing lines.

Keep the timesheets, prior payslips, holiday record and policy. If normal overtime disappeared from the reference calculation, identify those entries specifically rather than estimating a refund from one annual salary.

A practical message is: “Please show how my holiday pay for these dates was calculated. Which working-pattern rules, leave pot, reference weeks and earnings components were used? My regular overtime appears to be missing; could you explain its treatment?”

If the response does not resolve a payment issue, contact Acas in Great Britain or the Labour Relations Agency in Northern Ireland. Formal claims have time limits, so seek the current route promptly rather than waiting for another leave year.

For a future overtime decision, compare annual extra pay after deductions and costs. That planning result does not replace this records-based holiday-pay check.