When employment ends, the final payslip should include pay for statutory holiday the worker has built up but not taken.
Contractual holiday can also be payable, but the answer depends on the employment contract, holiday policy, and any relevant agreement. That is why final holiday pay needs two checks: the legal minimum and the contractual position.
This guide explains the difference and gives employers a practical way to calculate holiday pay on termination.
Quick answer
For a leaver, check:
- How much statutory holiday the worker accrued up to the termination date.
- How much holiday they already took.
- Whether any carried-over leave is still payable.
- Whether the contract gives extra holiday above the statutory minimum.
- Whether the contract allows deductions if the worker took too much holiday.
- The correct holiday pay rate for their working pattern.
If there is unused statutory holiday, it should normally be paid in lieu in the final pay.
Use the Workmax holiday pay calculator for an estimate, then check the contract and records before processing payroll.
Statutory holiday vs contractual holiday
Statutory holiday is the legal minimum. GOV.UK says almost all workers are legally entitled to 5.6 weeks' paid holiday a year. For someone working 5 days a week, that is 28 days. Statutory paid holiday is capped at 28 days.
Contractual holiday is anything the employer gives above the statutory minimum. For example:
- 25 days plus bank holidays;
- an extra day after long service;
- enhanced leave for managers;
- a contractual carry-over policy.
The statutory minimum is governed by employment law. Contractual holiday is governed by the employment contract, handbook, or other relevant agreement.
What must be paid when employment ends?
When a worker leaves, they should be paid for statutory holiday they have accrued but not taken.
For extra contractual holiday, the contract matters. Some contracts say extra holiday is paid on termination. Some say it is lost unless the employer agrees. Some set their own accrual formula for the extra days.
The safest payroll process is:
- Calculate the statutory minimum.
- Calculate the contractual entitlement.
- Pay at least what is legally required.
- Apply any contract terms for extra entitlement.
- Document the calculation.
How to calculate final holiday pay
The usual structure is:
Accrued holiday - holiday taken = holiday to pay or deduct
Then:
Holiday to pay x holiday pay rate = final holiday payment
The detail depends on how the worker is paid.
Example: fixed-hours employee
An employee works 5 days a week and receives 28 days' annual leave. The leave year runs from 1 January to 31 December. They leave on 30 June and have taken 10 days.
Accrued leave:
- 28 days x 6/12 = 14 days
Holiday still owed:
- 14 days accrued - 10 days taken = 4 days
If the employee's daily rate is GBP 120, the final holiday pay is:
- 4 x GBP 120 = GBP 480
Example: contractual holiday above the minimum
An employee receives 33 days under their contract. The statutory minimum for their pattern is 28 days.
If they leave part-way through the year, payroll should check:
- whether the contract says the extra 5 days accrue in the same way as statutory leave;
- whether unused extra days are paid on termination;
- whether any carry-over rules apply;
- whether bank holidays are included in the 33 days.
Do not assume extra contractual holiday follows the same rules as statutory holiday unless the contract says so.
What if the employee took too much holiday?
Sometimes a worker has taken more holiday than they accrued by the leaving date.
An employer should be careful before deducting pay from final salary. A deduction for overtaken holiday normally needs a clear contractual right or written agreement. If the contract does not allow it, deducting money can create an unlawful deduction from wages risk.
The payroll record should show:
- how much leave was overtaken;
- the calculation method;
- the contractual clause or written agreement allowing the deduction;
- the amount deducted.
Variable pay, irregular hours, and part-year workers
Holiday pay is more complex when hours or pay vary.
ACAS guidance says holiday pay for fixed-hours workers with variable pay is usually based on average pay over the previous 52 weeks, excluding holiday pay from the reference period.
For irregular-hours and part-year workers, ACAS says holiday pay is based on the worker's average hourly rate over the previous 52 weeks, and holiday pay during that reference period should be included.
For leave years beginning on or after 1 April 2024, irregular-hours and part-year workers build up leave depending on hours already worked. GOV.UK says they accrue leave rather than receiving a fixed amount at the start of the year.
That is why employers need to know the worker type before calculating final holiday pay.
Common mistakes
Avoid these final-pay mistakes:
- using a flat daily rate for someone with variable pay;
- ignoring regular overtime, commission, or other pay that should be reflected;
- treating contractual holiday as automatically payable without checking the contract;
- deducting overtaken leave without a contractual right;
- missing carried-over statutory leave;
- using incomplete timesheet or holiday records;
- not showing the final payment clearly on the payslip.
Final payslip checklist
Before processing the leaver's final pay, check:
- Start date and termination date.
- Leave year dates.
- Statutory entitlement.
- Contractual entitlement.
- Holiday taken.
- Holiday carried over.
- Working pattern and pay pattern.
- 52-week reference-period data, if needed.
- Contract clause for overtaken leave deductions.
- Payslip wording and audit record.
Where Workmax helps
Final holiday pay should not rely on a spreadsheet that only one person understands.
Workmax connects holiday records, timesheets, employee records, payroll inputs, and approval history so payroll can see what someone earned, what leave they took, and what needs to be paid when they leave.
Useful next steps:
Official sources checked
This article was refreshed against the following official sources on 1 July 2026:
Bottom line
Statutory holiday pay on termination is a legal minimum. Contractual holiday depends on the contract.
Calculate the statutory amount first, check the contract for anything extra, use the correct pay reference period, and keep a clear payroll record of how the final figure was reached.
