Holiday Pay for Zero-Hours Staff: Rolled-Up vs Accrual – Which Is Right for Your Business?
If you run a cleaning business, a nursery, a pub, or any company that uses staff on zero-hours contracts, there’s one question that always comes up:
👉 “How do we handle holiday pay?”
It might sound like boring HR detail, but get it wrong and you’re looking at underpayment claims, HMRC inspections, and even tribunal cases.
Since April 2024, the law finally made it crystal clear: you’ve got two lawful options for casual/irregular hours staff. Both work. Both are legal. But they come with very different consequences for your business.
Let’s break it down.
Option 1: Rolled-Up Holiday Pay (The New Norm)
How it works: You add 12.07% to every payslip, on top of the worker’s pay. It’s clearly labelled as holiday pay.
Where it applies: Only for irregular hours and part-year workers (zero-hours cleaners, bar staff, seasonal workers).
Why it’s back: The April 2024 reforms reintroduced rolled-up pay, after years of legal grey areas.
Pros (for employers):
Simple and transparent — no need to track leave balances.
Reduces admin — payroll handles it automatically.
No shock holiday pay bills if someone quits suddenly.
Pros (for workers):
See holiday pay every payday.
Clear entitlement.
Cons:
Workers may never actually take time off — they still have the right to, but often won’t.
You must show holiday pay as a separate line on the payslip, or it’s unlawful.
Option 2: Accrue & Take (The Traditional Route)
How it works: Staff accrue paid leave as they work, pro-rata to 5.6 weeks a year. They must request time off, and are paid when they take that leave.
Why it exists: It ensures staff actually step away and rest, which is especially important for longer-term workers.
Pros (for employers):
Encourages staff to actually take breaks — healthier workforce.
Feels familiar — many payroll systems are already set up for it.
Pros (for workers):
Time off is properly paid.
Feels more like a permanent job benefit.
Cons:
More admin: track balances, approve leave, update payroll.
If a worker leaves suddenly, you owe them for all accrued untaken holiday.
Which One Should You Choose?
Here’s the truth: most SMEs in cleaning, hospitality, and care now use rolled-up (12.07%).
Why? Because staff turnover is high, admin time is low, and it’s transparent. Your workers see it, you don’t get caught with holiday debt, and it keeps payroll simple.
But — if you’ve got longer-term, more stable zero-hours staff (say, a cleaner who’s been with you 5 years on the same contract), the accrual method may be better for wellbeing and fairness.
The Risk of Getting it Wrong
Holiday pay is one of the most litigated areas of employment law. Tribunals are full of cases where businesses underpaid casual staff, miscalculated entitlements, or failed to account for irregular hours properly.
A few facts to make you sit up:
In 2024/25, there were 42,000 new employment claims in the UK.
Around 14% were breach of contract claims, many of which relate to holiday and pay disputes.
The average UK business spends 4.8 weeks dealing with tribunal cases.
💥 Imagine losing a month of your year fighting over a mistake that could have been avoided with one line in a contract and a clean payroll setup.
HR Matters’ View
At HR Matters, we don’t waste time on theory. We set businesses up the right way, from day one:
Zero-hours cleaner? Rolled-up holiday pay, 12.07%, clearly itemised.
Core casual team member? Accrual and booking system, so you encourage proper time off.
All the paperwork, contracts, and payroll notes done — so if HMRC or a tribunal comes knocking, you’re bulletproof.
No wasted cash flow. No tie-ins. Just HR that works.
Final Word
Holiday pay might seem small, but it’s often the detail that makes or breaks a business in front of a tribunal judge.
So here’s the choice:
Guess, hope for the best, and risk claims.
Or set it up properly, once, with HR Matters.
👉 Ready to get your house in order? Call us today on 01733 667030 or book a 30-min chat here: calendly.com/hello-hr-m/30min
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