Rolled-up holiday pay at 12.07%: when it is lawful, and the sick-leave trap

By Patrick Roper ACA, ICAEW chartered accountant. Last reviewed 1 November 2026. Figures next checked by 31 January 2027.

An employer may pay rolled-up holiday pay only to irregular-hours workers and part-year workers, only for leave years beginning on or after 1 April 2024, at a rate of at least 12.07% of the worker's total pay in each pay period, paid at the same time as the work and shown as a separate line on the payslip. Acas also states a rule many payrolls miss: a worker on rolled-up pay must not lose holiday pay while off sick or on statutory leave, so the employer keeps paying the average rolled-up amount of the previous 52 weeks through the absence.

The three conditions

Acas lists what an employer using rolled-up holiday pay must do. The employer must:

• calculate it at a rate of at least 12.07% of the worker's total pay in the pay period;
• pay it at the same time as the pay for the work done in that period; and
• show it as a separate payment on the worker's payslip.

Acas gives the example of Jian, an irregular-hours worker who earns £1,000 in June and must receive £120.70 of rolled-up holiday pay on top, shown separately. In July Jian works two weeks, takes two weeks off, earns £500 and receives £60.35 on top. Nothing is paid for the two weeks of holiday, because that is what rolling up means.

Who it is for, and who it is not

The gov.uk guidance is explicit: rolled-up holiday pay is an additional method for irregular-hours and part-year workers only, for leave years beginning on or after 1 April 2024. A salaried employee, a fixed-hours employee, and any worker in a leave year that began before April 2024 are outside it. Paying those workers a rolled-up uplift instead of paying them when they take leave is the old pre-2024 problem, not the new method.

Acas also says employers do not have to use it. The 52-week average, paid when the holiday is taken, remains available for the same workers, and Acas lists the reasons some employers stay with it: a worker who receives nothing in a holiday week may be put off taking holiday, and the employer still has the duty to make sure leave is taken.

The sick-leave trap

This is the rule that produces most of the underpayments on rolled-up payrolls, because the payroll software does exactly what it is told: 12.07% of pay, and when there is no pay there is no uplift. Acas says the opposite must happen. An irregular-hours or part-year worker must not lose holiday pay while off sick or on statutory leave, and the employer must pay holiday pay in those pay periods.

The amount is the average rolled-up holiday pay the worker received per pay period in the 52 weeks before the absence began. Acas's example: Pat is paid weekly, goes off sick for two months, and averaged £36 of weekly holiday pay over the previous 52 weeks, so the employer pays £36 a week for every week of the sickness. Statutory leave for this purpose includes maternity, paternity, adoption, shared parental, ordinary parental, neonatal care, parental bereavement, carer's and bereaved partner's paternity leave.

If the employer has been rolling up for fewer than 52 weeks, the average is over the weeks it has been rolling up. If the worker has been employed for fewer than 52 weeks, it is over the weeks employed.

How this shows up in an exposure check

1. List every worker paid a rolled-up uplift, and check each one against the contract definition. Those who do not meet it are owed holiday pay when they took leave, on the 52-week average.
2. For those who do, check the percentage was applied to total pay, not basic, and that it appears as a separate payslip line in every period.
3. Pull every period of sickness or statutory leave since the uplift began and check holiday pay was paid through it at the 52-week average.
4. Check the leave year start date. Any period before the first leave year beginning on or after 1 April 2024 is outside the method entirely.

The £295 snapshot runs those four checks on a sample and gives the range in writing. It is a calculation by a chartered accountant, not legal advice, and not a finding by any agency.