Calculator · Termination holiday

Holiday pay on redundancy

On the last day of employment your employer must pay you for any statutory leave you accrued but did not take. The calculation is service-time × statutory entitlement, minus what you already took.

The basic calculation

Statutory leave is 5.6 weeks per year (28 days for a 5-day worker, including the 8 bank holidays). The formula on termination is set out in WTR 1998 reg.14. Accrual is daily on a pro-rata basis.

Worked example: leave year runs April to March, you leave on 31 August, 4 months into the leave year. Statutory entitlement 5.6 weeks pro-rata = 1.87 weeks. If you took 5 days, the employer owes 1.87 weeks minus the 5 days, payable at your normal week's pay.

Variable hours: the 52-week reference

For workers without fixed hours, a week's pay is the average of the last 52 paid weeks (skipping any unpaid weeks). This is the post-Harpur Trust position confirmed in ACAS guidance: holiday pay when leaving a job.

Tax treatment

Holiday pay on termination is taxed in full as employment income. It is NOT covered by the £30,000 termination-payment exemption in ITEPA 2003 s.401, because it is earnings you would have received anyway. Income tax and employee NICs apply at the usual rates.