52-Week Holiday Pay Reference Period UK 2026

Before 6 April 2020 the reference period for variable-pay workers was 12 weeks. The change to 52 weeks was made by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018, with the new 52-week window taking effect from April 2020. The drive for the change was straightforward: a 12-week window allowed seasonal workers, agency workers, and commission-based salespeople to be paid holiday at a rate that did not reflect their typical year.

A hotel worker who happened to book their summer holiday in early June, having just come through the quiet shoulder season of April and May, could find their two weeks of leave paid at the lowest twelve-week average of their entire year. The 52-week window prevents that timing trap. Whatever week the worker takes leave in, the preceding year of pay is what gets averaged, so high-season weeks always feed into the calculation alongside low-season ones.

The reform also aligned UK practice with the principle established in the Court of Justice of the European Union case British Airways v Williams that holiday pay should be calculated by reference to the worker's normal remuneration. A short 12-week snapshot was too easily distorted by abnormal weeks; a 52-week average captures something closer to a normal year.

The starting point is the statutory definition of a week's pay in sections 220 to 229 of the Employment Rights Act 1996. That definition has been substantially broadened over the past decade by a series of Employment Tribunal and EAT decisions that treated non-basic-pay components as part of a week's pay where they were intrinsically linked to the work the contract required.

The key cases are Williams v British Airways (CJEU 2011), British Gas Trading Ltd v Lock (CJEU 2014, then EAT and Court of Appeal), and Bear Scotland Ltd v Fulton (EAT 2014). Together they established that regular overtime that the employer expects the worker to do, results-based commission, shift premiums for unsocial hours, and travel-time allowances all count toward a week's pay for the first 4 weeks of statutory holiday (the EU Working Time Directive minimum). For the additional 1.6 weeks granted by UK law on top of the EU minimum, basic pay alone is sufficient, although most employers do not bother to make this distinction in practice.

The April 2024 reform of WTR 1998 codified much of this case law into the statutory definition. Regulation 13A and the new regulations on irregular-hours and part-year workers explicitly list the pay components that must be included in the average. Discretionary one-off bonuses, ex gratia payments, and reimbursed expenses remain outside the calculation. So does pay that was itself holiday pay (you do not compound). The GOV.UK statutory guidance on calculating holiday pay walks through each component.

The rule is that you skip any week in which the worker received no pay and look back further. A week of unpaid sick leave, a week of lay-off, a week where an agency worker received no bookings, a school holiday for a term-time-only worker: each of these is a zero-pay week, and the calculation walks past them in search of 52 weeks of actual paid work.

The look-back is capped at 104 weeks. If after going back two full years the worker still does not have 52 paid weeks, the average is taken across whatever paid weeks they do have. For a worker who has been employed for only 30 weeks, the average uses those 30 weeks. For a worker with a long history of intermittent work, the calculation can reach back exactly 104 weeks and stop, taking the average across however many paid weeks fall within that window.

Weeks of paid holiday themselves are tricky. The Court of Appeal in Smith v Pimlico Plumbers and a series of follow-on cases has held that paid holiday weeks do count as paid weeks for the purpose of finding 52 weeks of work, but the holiday pay itself does not compound the average (otherwise each year's holiday pay would inflate the next year's). In practice most payroll systems treat paid holiday as a paid week and use the basic or contractual pay component, not any premium, when averaging.

Workers with fixed weekly hours and fixed weekly pay never need the 52-week reference period. Their week's pay is whatever appears on their contract. The calculation only matters where pay varies, and even then it only matters for the portion of holiday pay that is variable.

Irregular-hours and part-year workers as defined by the April 2024 reform have their accrual measured in hours (12.07% of hours worked) rather than weeks, so the 52-week period applies to their rate of pay rather than to their volume of leave. If their hourly rate is fixed, no averaging is needed; the rolled-up 12.07% on each payslip uses the fixed rate. If their hourly rate varies (shift premiums, weekend rates, bank holiday uplifts), the 52-week average produces the effective hourly rate for holiday pay purposes.

Salaried staff with bonuses or commission elements need the 52-week period for the variable element only. Many large employers run a hybrid: basic salary is paid normally on holiday, and an additional commission top-up is calculated from the 52-week average and added to the payslip. ACAS guidance on calculating holiday pay sets out the hybrid model clearly.