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Hospitality glossary · People and retention

Holiday pay accrual

Holiday pay accrual is the paid annual leave a worker builds up as they work, based on the statutory entitlement of 5.6 weeks a year, which for a full-year worker is where the familiar 12.07% of hours figure comes from.

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In practice

Holiday pay accrual in a real operation.

Definitions are easy. What matters is how the thing behaves in a real operation, and where it tends to go wrong.

What it looks like in a UK hospitality business

That percentage is simply 5.6 weeks of leave divided by the 46.4 weeks a worker is actually available, and it is the shorthand most hospitality payroll uses for variable-hours staff. Rules for irregular-hours and part-year workers were reformed for leave years starting on or after 1 April 2024, including the option of rolled-up holiday pay paid as an uplift on each payslip. Which basis applies depends on your contracts, so confirm yours with payroll.

The mistake operators make

Treating it as a payroll detail rather than a cost of the rota. Every hour you schedule carries roughly twelve pence in the pound of future holiday pay whether or not anyone has booked leave, and a labour percentage calculated on gross pay alone quietly ignores it along with National Insurance and pension.

Questions

Holiday pay accrual, answered.

Something here that doesn’t match what you’re seeing in your own business? That is usually worth a conversation rather than another article.

What does holiday pay accrual mean in hospitality?

Holiday pay accrual is the paid annual leave a worker builds up as they work, based on the statutory entitlement of 5.6 weeks a year, which for a full-year worker is where the familiar 12.07% of hours figure comes from. That percentage is simply 5.6 weeks of leave divided by the 46.4 weeks a worker is actually available, and it is the shorthand most hospitality payroll uses for variable-hours staff. Rules for irregular-hours and part-year workers were reformed for leave years starting on or after 1 April 2024, including the option of rolled-up holiday pay paid as an uplift on each payslip. Which basis applies depends on your contracts, so confirm yours with payroll.

What do operators get wrong about holiday pay accrual?

Treating it as a payroll detail rather than a cost of the rota. Every hour you schedule carries roughly twelve pence in the pound of future holiday pay whether or not anyone has booked leave, and a labour percentage calculated on gross pay alone quietly ignores it along with National Insurance and pension.

Related terms

Worth reading next.

Labour cost percentage

Labour cost percentage is total staff cost — wages plus employer National Insurance, pension contributions and holiday pay — expressed as a share of sales for the same period.

National Living Wage

The National Living Wage is the statutory minimum hourly rate employers must pay workers at or above a set age, with lower National Minimum Wage rates applying to younger workers and apprentices.

Zero-hours contract

A zero-hours contract is an employment contract with no guaranteed minimum hours — the employer offers work as it comes up, and the worker is under no obligation to take it.

WHY Hospitality

Knowing the term is not the same as fixing the problem behind it.

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