This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Are you owed holiday pay after redundancy? Learn how to calculate your accrued, untaken leave, and the steps you must take to claim the money you are legally entitled to.
When an employee is made redundant in England and Wales, they do not lose their entitlement to holiday pay. Under UK employment law, holiday accrues during employment and must be accounted for when the employment ends. This includes unused statutory holiday entitlement that the employee has built up but not taken by the termination date. If an employer does not pay what is owed, the former employee may have grounds to pursue a claim, including a possible tribunal claim for unlawful deduction from wages. This article explains the legal framework, how holiday pay is calculated on redundancy, timing of payments, contractual entitlements and practical rights and processes.
Statutory Holiday Entitlement and Redundancy
Much of the law governing holiday pay comes from the Working Time Regulations 1998. These regulations give most workers a legal right to at least 5.6 weeks' paid holiday each year. When employment ends, this statutory entitlement continues to accrue up to the last day of employment. An employer must pay in lieu of any unused accrued holiday rather than letting the entitlement simply lapse. This payment is often described as a payment in lieu of holiday.
Under these rules, holiday accrues proportionately throughout the holiday year. If an employee is made redundant part‑way through a leave year, they are entitled to payment for the proportion of their statutory holiday entitlement they have accrued but not taken by the termination date.
Calculating Holiday Pay Owed
How Much Holiday Has Been Accrued
To work out how much holiday pay is owed on redundancy, it is necessary to determine:
- The total statutory holiday entitlement for the employee's working pattern (commonly 5.6 weeks' annual leave for a full‑time worker).
- The proportion of that entitlement accrued up to the redundancy date - often prorated based on the number of complete months worked in the holiday year.
- The amount of statutory holiday already taken during the leave year.
If, for example, a full‑time employee is entitled to 28 days' statutory holiday per year (5.6 weeks), and they are made redundant after six months of the holiday year and have taken 10 days' leave, the calculation would be:
- 28 days × 6/12 = 14 days' accrued entitlement
- 14 accrued − 10 taken = 4 days owed as payment in lieu.
Employers may base this calculation on daily or hourly rates depending on the contract and working pattern. For part‑time or zero‑hours workers, entitlement is usually pro‑rata based on hours worked.
Statutory vs Contractual Holiday
Some contracts of employment provide more generous contractual holiday entitlements than the statutory minimum. In these cases, entitlement to additional (contractual) holiday pay will depend on the terms of the contract. Contractual holiday above the statutory minimum is a matter of contract law and may or may not accrue in the same way on termination; employers should refer to the express terms of the employment contract.
Holiday During Notice Period
Employees continue to accrue statutory holiday entitlement during their notice period, including if they are given notice or receive a payment in lieu of notice (PILON). The entitlement to accrue holiday continues until the employment contract ends. Employers can require employees to take accrued holiday during the notice period, provided they give appropriate notice.
If holiday is taken during the notice period, this reduces the amount of unused holiday owed at termination. If holiday cannot be taken (for example, because the notice period is short or all leave has been exhausted), payment must be made in lieu.
Timing of Payment
Holiday pay owed on redundancy should be included in the final pay or paid as soon as reasonably practicable after the employment ends. Employers must calculate and pay the payment in lieu of holiday along with other final sums owed, such as notice pay and statutory redundancy pay.
The final payslip should show how holiday pay has been calculated. If an employer fails to pay the full amount owed, the former employee can first raise the issue informally with the employer and, if unresolved, may pursue a statutory claim to an employment tribunal for unpaid holiday pay or unlawful deduction from wages.
Contractual Considerations
Enhanced or Additional Holiday
Where an employment contract or workplace policy provides more holiday than the statutory minimum, it is essential to check the terms for how contractual holiday accrues and is paid on termination. Employers sometimes include contractual provisions that can affect holiday accrual or payment. Unless the contract clearly states otherwise, enhanced leave should accrue proportionately in line with statutory rules.
Deduction for Overused Holiday
If an employee has taken more holiday than they have accrued at termination, an employer may deduct the equivalent amount from the final pay if the contract expressly allows such a deduction in writing. Without such contractual authority, deductions risk being treated as unlawful.
Unpaid Holiday and Insolvent Employers
If an employer becomes insolvent and cannot pay holiday owed, an employee may be able to claim for the owed holiday pay through the Redundancy Payments Service administered by the Insolvency Service. In this context, statutory rules limit how much holiday pay can be recovered and often cap payable amounts.
Common Questions
Do you accrue holiday if you have not taken any leave before redundancy?
Yes. Holiday accrues over the employment period and is payable as a pro‑rata cash sum if not taken by the termination date.
Can an employer require you to take holiday during your notice?
Yes, employers may direct employees to take accrued holiday during a notice period, provided appropriate contractual or statutory notice is given.
What if you argue over the amount?
If you disagree with how holiday pay has been calculated, raise this with the employer; failing resolution, you may lodge a claim with an employment tribunal within the statutory time limits.
Key Takeaways
When an employee is made redundant in England and Wales, they are entitled to be paid for unused accrued holiday up to their termination date. This holiday pay must be calculated based on the statutory minimum entitlement under the Working Time Regulations 1998 and may include contractual holiday above that minimum if the contract provides. Employers should ensure correct calculation and payment of holiday pay as part of the final pay process. Holiday accrues through notice periods, and any owed payment should be included at termination or shortly thereafter. Where employers fail to pay properly, employees may have grounds to pursue their rights through employment tribunals or, in insolvency cases, through appropriate government services.
