Calculating holiday pay entitlement for your zero hour contract workers can seem complicated.
But don’t let the numbers scare you—it’s fairly straightforward when you break it down.
What’s the law on holiday pay entitlement?
Workers have a legal right to a minimum of 5.6 weeks of paid holidays.
For employees who work five days a week, this works out to 28 days (5.6 weeks x 5 days = 28). You can include public holidays in this amount if you want to. But what about workers on zero hour contracts? Do they even get holiday pay?
Do staff get holiday pay on zero hour contract?
Yes, workers do get holiday pay even on a zero hour contract. Even though they might work fewer hours than full-time employees, these workers still have rights. This includes a right to annual leave.
How to calculate holiday entitlement
When employees work a fixed number of hours in a week—whether full-time or part-time—holiday entitlement is normally calculated in days.
But because zero hour contract workers’ hours are less predictable, it makes more sense to calculate it in hours instead.
The easiest way to do this is by using percentages. 5.6 weeks as a percentage of the total hours worked in a year works out to 12.07%.
Then, all you have to do is take the number of hours your zero hour contract worker has worked and multiply it by 12.07%.
Example of a zero hour contract holiday calculation
Let’s say you have a worker who has worked 20 hours in a week.
To find out how much leave you owe them, this is the calculation you’d make: 12.07 ÷ 100 x 20 = 2.4 hours. 2.4 hours works out to 144 minutes, and that’s their holiday entitlement.
If maths isn’t your strong point, you can use the government’s holiday entitlement calculator.
How to calculate the rate of holiday pay
Now that you’ve figured out the amount of time off you need to give your worker, you now need to work out the rate of holiday pay.
To do this for zero hour contract workers, you can take an average of their pay over the previous 52 weeks.
If there was a week in this period when they didn’t work, all you have to do is replace it with the most recent week when they did work before the 52-week period started.
If they haven't worked for at least 52 weeks, an average should be worked out from the time they have worked.