Holiday Pay and Commission in the UK
Learn how holiday pay commission is included in normal holiday pay for irregular-hours and part-year workers, plus the scope, reference period and records.
- GOV.UK states that normal holiday pay for irregular-hours and part-year workers includes commission; do not extend this scoped guidance to every working arrangement.
- GOV.UK describes an average based on the previous 52 weeks, counting only weeks in which the worker was paid.
- Keep the earnings breakdown, selected weeks and calculation decisions together for payroll review.
GOV.UK includes commission in normal holiday pay for irregular-hours and part-year workers. Understand the scope, reference period and records to review.
Legal Requirements for Including Commission in UK Holiday Pay
Commission belongs in the holiday pay calculation for the workers covered here: GOV.UK states that irregular-hours and part-year workers receive all leave at their normal rate of pay, which includes commission. Start by confirming the worker’s circumstances rather than assuming that a salary-only calculation or a single percentage will answer the question.
GOV.UK also states that people working irregular hours or part of the year are entitled to up to 5.6 weeks’ statutory leave. Keep the amount of leave and the earnings used to pay for it as separate questions in your review. Establishing the leave entitlement alone does not complete your commission calculation.
Confirm the scope before changing payroll
Ask HR and payroll to confirm the working arrangement, the leave being paid and the relevant commission records. For regular-hours staff or a disputed historic payment, seek a separate assessment rather than treating this irregular-hours and part-year guidance as a complete answer. This guide does not determine whether an individual payment amounts to an unlawful deduction.
How to Calculate Holiday Pay When Earnings Include Commission
Build the calculation from an agreed earnings breakdown and a clearly identified reference period. GOV.UK describes average pay for irregular-hours and part-year work using the previous 52 weeks, counting only weeks in which the worker was paid. Confirm that this method applies to the worker before processing the result.
Determining What to Include in the Calculation
For the normal rate applicable to irregular-hours and part-year workers, GOV.UK includes commission, regular overtime and payments related to length of service or professional qualifications. GOV.UK says that this rate does not usually include bonus payments. Preserve that distinction: ask payroll to assess an ambiguous payment rather than classifying it solely by its label.
Prepare an earnings worksheet with separate entries for each payment component, its payment date and the underlying commission statement. If your plan uses tiered commission, keep the plan calculation alongside the earnings record. Treat the commission plan calculation and the holiday pay assessment as separate review steps; do not substitute a sales target or forecast for the payment record.
Applying the 52-Week Reference Period for Variable Pay
GOV.UK’s reference to paid weeks matters when assembling the average: the previous 52 weeks count only weeks in which the worker was paid. In your worksheet, identify the weeks selected and retain the payment evidence behind each entry. Ask payroll to resolve missing history, monthly payment allocation or unusual adjustments before calculating the final holiday payment.
Before approval, have another person trace the proposed result back to the selected weeks and earnings components. Record any unresolved classification question beside the affected amount. For related commission planning resources, explore Qobra’s tools and templates; keep the holiday pay method subject to its own payroll review.
Maintaining Compliant Holiday and Commission Records
Keep a reviewable calculation pack rather than only the final payment figure. The practical steps here are recordkeeping recommendations, not a statement of statutory retention periods or inspection requirements. For each holiday pay commission review, bring together the leave request, earnings breakdown, selected reference weeks, calculation and approval decision.
Assign an owner to reconcile commission information with payroll. If that responsibility sits with a sales commission program manager, agree what they prepare and what Finance or HR assesses. Keep calculated commission, approved payout and the amount actually paid distinguishable in the review pack, and ask payroll to explain any difference before closing the review.
Qobra offers a no-code sales compensation platform for setting up compensation plans, with native CRM and software integrations. Consider those capabilities when reviewing how your team prepares commission inputs. Keep that product evaluation separate from the legal assessment of holiday pay: plan configuration and connected data do not establish the correct treatment of an individual worker’s leave.
When a figure changes, retain the original calculation alongside the revision and explain the reason for the change. Include the supporting payment record and the approval decision. Use this pack to frame a precise question for your payroll adviser: which earnings, which weeks or which working arrangement needs further assessment? Do not treat a complete file as proof of legal compliance.
Check the rules for your circumstances — General information only, not legal or tax advice. Official sources checked on 19 October 2026; check them or take professional advice.
Frequently asked questions
What are the new rules on holiday pay?
The applicable position needs to be checked against the worker’s circumstances and leave year. GOV.UK states that normal pay for irregular-hours and part-year workers includes commission. This is not a complete account of recent changes; ask a UK employment adviser to assess the changes relevant to your payroll.
Should commission be included in holiday pay?
GOV.UK states that irregular-hours and part-year workers receive all leave at their normal rate of pay, including commission. That is a scoped answer, not a complete rule for every employment arrangement. Confirm the worker’s circumstances and ask payroll or an employment adviser to assess any case outside that scope.
What is the 12.07 rule for holiday pay?
Do not use this percentage as a calculation instruction without checking its purpose and applicability. Ask a UK payroll or employment adviser to distinguish the amount of leave from the payment for that leave, then confirm the method for the worker’s circumstances. No percentage-based calculation is provided here.
Is holiday pay 8%?
A percentage alone is not enough to assess your payment. For irregular-hours and part-year work, GOV.UK describes average pay from the previous 52 weeks, counting only paid weeks. Ask payroll to confirm the applicable method rather than adopting the percentage in the question as a default.
