Can agencies pay rolled-up holiday pay to agency workers?

What the law allows

Regulation 16A of the Working Time Regulations 1998 lets an employer pay holiday pay to irregular-hours and part-year workers as an uplift of 12.07% on their pay for work done, instead of paying them when they take leave (reg 16A). The conditions are:

• the worker is an irregular-hours or part-year worker, as defined in regulation 15F;
• the amount is at least 12.07% of the worker's total pay in the pay period (Acas);
• it is paid in the same pay period as the work it relates to;
• it is shown as a separate item on the payslip.

Government guidance confirms it applies for leave years beginning on or after 1 April 2024 (GOV.UK). It cannot be used for leave years that began on or before 31 March 2024 (GOV.UK).

Who counts as irregular-hours or part-year

An irregular-hours worker is one whose paid hours in each pay period are, under their contract, wholly or mostly variable. A part-year worker is one whose contract requires them to work only part of the year, with periods of at least a week in which they are not required to work and are not paid (reg 15F). Many temps fit the first definition. Acas notes an agency worker could be either, depending on their pattern (Acas). A temp on a fixed 37.5 hours a week contract is not irregular-hours, and rolled-up holiday pay cannot be used for them (GOV.UK).

A simple example

Acas gives this example: an irregular-hours worker earns £1,000 in June and receives £120.70 rolled-up holiday pay on top, shown separately. In July they work two weeks and take two weeks off; they earn £500 and get £60.35 rolled-up holiday pay, but no pay for the weeks off (Acas).

The worker still has the right to take time off. Rolled-up pay only changes when they are paid for it.

What agencies must also do

• Tell the worker. Government guidance says employers of agency workers must include rolled-up holiday pay in the worker's key information document (GOV.UK, Conduct Regulations reg 13A).
• Sickness and statutory leave. A worker must not lose holiday pay for leave they build up while off sick or on statutory leave. That holiday is paid at the average holiday pay per pay period over the previous 52 weeks (reg 16A, Acas).
• Keep records. From April 2026, employers must keep adequate records to show they have complied with holiday pay rules, for 6 years (business.gov.uk).
• Count it as pay. Rolled-up holiday pay is earnings for employer NI and for pension qualifying earnings.

Pros and cons for an agency

Rolled-up pay is simple to run when hours change every week, and the agency does not carry a holiday liability for workers who leave. The downside, which Acas points out, is that the worker gets nothing in the weeks they are off, which can put people off taking holiday. Some agencies accrue holiday in hours instead and pay it when taken. Both are lawful for these workers; pick one, put it in the contract and the key information document, and apply it consistently.