Holiday pay reference period

When a reference period is needed

A reference period is used when hours or pay vary. It turns earlier weeks into an average for holiday pay. A worker with fixed hours and fixed pay usually receives their usual week's pay, so no average is needed.

The method depends on the working pattern. For fixed hours with variable pay, holiday pay received during the reference period is left out. For irregular-hours and part-year workers, holiday pay received during a reference week is included, whether the leave covered some or all of that week. The Acas calculation guidance sets out this distinction.

Irregular-hours and part-year workers

For these workers, use average pay from the previous 52 weeks. Replace a week with an earlier week of usual pay if the worker received only Statutory Sick Pay (SSP), received reduced pay during statutory leave, or received no pay. The employer can look back up to 104 weeks to find 52 usable weeks.

If the worker has not been employed for 52 full weeks, use the full weeks available. The specific Acas irregular-hours and part-year guidance explains which weeks to replace.

A worked reference-period example

Suppose an irregular-hours worker's latest four entries are £500 usual pay, SSP only, £480 including holiday pay and no pay. The next two earlier weeks of usual pay are £520 and £500.

For the full calculation, keep the pay date, relevant earnings and reason for including or replacing every week. Northern Ireland follows a different current averaging approach, so do not treat the Great Britain method as a UK-wide formula.