If you employ people on zero hours contracts, casual shifts or term time only, you've probably come across the number 12.07%. It sounds like something from a spy film but it's simply how holiday builds up for people whose hours change from week to week. Here's what it means and when you can use it.
Who does it apply to?
The 12.07% rule is for two groups of workers in leave years starting on or after 1 April 2024. Irregular hours workers are people whose paid hours are wholly or mostly variable, such as zero hours or casual staff. Part year workers are people who work only part of the year and aren't paid for the weeks in between, such as some term time staff.
It doesn't apply to people with regular hours, even if they work part time. Someone who always works three days a week builds up holiday in the normal way.
Where does 12.07% come from?
Everyone is entitled to 5.6 weeks of holiday a year, which leaves 46.4 weeks of the year for working. If you divide 5.6 by 46.4 you get 12.07%. So for every hour someone works, they build up 12.07% of an hour of holiday. If a casual worker does 30 hours in a week, they build up 3.62 hours of holiday. We round up to the nearest half hour so nobody gets less, which makes it 4 hours.
What is rolled up holiday pay?
Normally holiday is paid when it's taken. For irregular hours and part year workers you have a second option: you can add their holiday pay to every payslip as you go, at 12.07% of what they've earned in that pay period. This is known as rolled up holiday pay. If someone earns £360 in a week, you'd add £43.45 of holiday pay on top.
Many employers find this much simpler for casual staff because there's no balance to track and nothing left to settle when they leave. It does come with a few rules though.
- Show it separately. Rolled up holiday pay must appear as its own line on the payslip so the worker can see exactly what they're getting.
- Include the right pay. The 12.07% should be worked out on normal pay, which includes regular overtime and commission rather than basic pay alone.
- They still take the time off. Paying as you go doesn't replace the holiday itself. Workers still need the chance to take time off. They just won't be paid again when they do.
A quick word on getting it right
The most common mistake I see is using 12.07% for staff who actually have regular hours, which isn't allowed. The second is paying rolled up holiday pay without showing it on the payslip. Both are easy to fix and worth checking now, especially as employers must keep holiday pay records for six years from April 2026 and the new Fair Work Agency can look at holiday pay without anyone making a claim.
Let the calculator do the maths
Our free holiday pay calculator works out rolled up holiday pay and the hours built up for any pay period, so you don't have to reach for a calculator every payday. For leavers on regular hours, see how to calculate holiday pay for leavers.
If you employ casual or term time staff and want to be sure your holiday pay is right, book your free 30 minute HR chat and we'll take one more thing off your plate.
This article is general guidance rather than legal advice and reflects the law at the date of publication. Sources: GOV.UK: holiday pay and GOV.UK: calculate holiday entitlement.