Holiday pay and the 52-week average: skipped weeks, the 104-week look-back and overtime

Where this applies: Great Britain (England, Wales and Scotland). The regulations below are marked as extending to England, Wales and Scotland on legislation.gov.uk. Northern Ireland has separate holiday rules and is not covered. Not legal advice.

Regulation 16(1) of the Working Time Regulations 1998 says a worker is paid for annual leave “at the rate of a week’s pay in respect of each week of leave”. Where pay varies, a week’s pay is an average, worked out under sections 221 to 224 of the Employment Rights Act 1996 as modified by regulation 16(3).

The reference period

52 weeks: reg 16(3)(e) reads the references to twelve weeks in ERA 1996 s.224 and the related sections as 52, or, for a worker employed for less than 52 complete weeks, the number of complete weeks they have been employed.
Weeks with no pay are skipped: s.224(3): “no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in”.
104-week limit: reg 16(3)(f): no account is taken “of remuneration in weeks preceding the period of 104 weeks” ending with the last complete week before the calculation date (or with that week, if the calculation date is its last day).
Calculation date: reg 16(3)(c): “as if the calculation date were the first day of the period of leave in question”.
What a week is: GOV.UK: “A ‘week’ usually runs from Sunday to Saturday. Only use another 7-day period (like Thursday to Wednesday) if that’s how a worker’s pay is calculated.”

What goes into the average

Reg 16(3ZA), for leave under reg 13 and reg 15B, includes payments “intrinsically linked to the performance of tasks” the worker is obliged to do, payments for professional or personal status such as length of service, seniority or qualifications, and “other payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date”. GOV.UK’s summary of the “normal” rate includes “commission, regular overtime payments, and any payments related to length of service or professional qualifications”.

For monthly-paid workers, GOV.UK describes working out average hourly pay for the month and multiplying by the hours worked in the week.

Checking a holiday payment against the average

Find the first day of the leave.
Count back through complete weeks before it, skipping weeks with no pay, until you have 52 (or as many as the worker has), going back no further than 104 weeks.
Add up the pay and the hours worked in those weeks, including regular overtime and the other payments reg 16(3ZA) lists, and leaving out holiday pay itself.
Compare the holiday pay per hour of leave with the average pay per hour worked.

What Leaveproof does

Builds a weekly series from the payroll export, with weeks ending on the day you choose (Saturday by default), skipping weeks with no pay and looking back at most 104 weeks.
Shows the 52-week average weekly and hourly pay for each worker and compares the holiday pay per hour in each period with holiday against average pay per hour worked, flagging payments below it.
Takes holiday and rolled-up pay out of a gross pay column if you tell it the column includes them, so the average isn’t overstated.

Leaveproof reads a payroll export saved as CSV, one row per worker per pay period (or per pay item), plus the employer’s leave sheet if there is one. It is designed for exports from Xero Payroll UK and BrightPay, but their report columns are chosen by the user and have not been checked against every layout, so Leaveproof shows the columns it detected and asks you to confirm which is which before it works anything out. It remembers that choice for each employer. Any payroll software that can export pay periods, pay, hours and holiday columns to CSV can be used the same way.

Approximations it tells you about

Monthly and other multi-week pay periods are spread evenly over their days to build the weekly series. That is an approximation.
The calculation date used is the start of the pay period that contains the holiday, not the exact first day of leave.
For regular-hours workers it doesn’t decide whether a payment relates to the 4 weeks (reg 13) or the 1.6 weeks (reg 13A); a payment below the average is flagged with a note.
It works from the columns you map. Which payments count as regular overtime or commission is your call when you choose the columns.

Try it on your own payroll export. Free, no account or sign-up, nothing uploaded: it runs in your browser. The Free plan covers one employer and the first 5 workers (by worker ID) in the records pack and exceptions. Standard ($19 per month or $190 per year) covers every worker for one employer; Bureau ($49 per month) covers any number of employers: see pricing.

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Not legal advice. This guide summarises the statutory minimum rules in the Working Time Regulations 1998 as they apply in Great Britain (England, Wales and Scotland), checked against legislation.gov.uk and GOV.UK on 27 October 2026. Contracts, collective agreements and individual cases can change the answer; take advice on a specific case. Leaveproof is independent and not affiliated with or endorsed by Xero or BrightPay. Xero is a trademark of Xero Limited; BrightPay is a trademark of Bright Software Group.