The 12.07% method is back! Here’s how to use it when calculating accrued holiday entitlement.
In this article, we explain when to use holiday accrual (and the 12.07% method), breakdown the calculation for you, and go into the laws you need to be aware of surrounding annual leave.
The basics
Holiday accrual meaning
Accrued holiday is the number of days off that an employee accumulates as annual leave over a certain period of time. There are just two things you need to know to calculate accrued leave:
- How long the employee has worked there for (for example, hours in the pay period)
- The annual leave they’re entitled to per year as part of their contract
Payroll professionals refer to the calculation to work out accrued leave as ‘12.07% method’.
When should you use the 12.07% holiday accrual method?
For leave years starting from 1st April 2024 onwards, employers need to use the 12.07% accrual system to calculate leave for irregular-hours workers, casual (zero-hour) workers, and part-year workers.
For other workers with different contract types, different rules apply. For example, you can use our part time calculator to find out annual leave entitlement for part-time workers based on hours or days.
How to work out holiday accrual?
The amount of leave the employee accrues depends on their ‘pay period’, and how many hours they’ve worked within that period. Once you’ve worked out how much leave you owe the employee, they can then take this leave from their next pay period.
Often for these contract types, this is taken in hours rather than days.
Statutory leave
Holiday accrual calculation | Statutory leave
To find out the number of hours’ holiday the worker has accrued when they have the statutory minimum of annual leave entitlement (28 days in a year), you simply do:
12.07% x hours worked = hours accrued
You can also display this as:
0.1207 x hours worked = hours accrued
For example, if they worked 25 hours in a week, multiply 25 by 12.07% to calculate what they’ve accrued that week (25 × 0.1207 = 3.02, which you’d round down to three hours).
If you’re looking for how to apply this to an employee who has over 5.6 weeks of holiday, keep reading!
Enhanced leave
How to use 12.07% method for enhanced leave above 28 days
Of course, 12.07% is used when the statutory minimum holiday is provided. Statutory minimum holiday is 5.6 weeks in an annual leave year, which equals 28 days for a full-time employee.
But you might be wondering, how does this number change when the employer gives above the statutory minimum holiday entitlement, such as 30 or 33 days? Can you still use the 12.07% method?
The answer is, yes you can still use that method – you’ll just need to increase the percentage. Of course, if an employer gives more than 28 days, the percentage of holiday entitlement they’re allowed will go up accordingly.
Using our calculator above, you’ll be able to calculate the annual leave entitlement for workers who are entitled to enhanced leave using the 12.07% method. We’ve also broken the calculation down for you below.
Percentage holiday entitlement for enhanced leave, using 12.07% method
| Annual leave entitlement (days) | Annual leave entitlement (weeks) | Percentage of holiday entitlement |
|---|---|---|
| 28 | 5.6 | 12.07% |
| 29 | 5.8 | 12.55% |
| 30 | 6 | 13.04% |
| 31 | 6.2 | 13.54% |
| 32 | 6.4 | 14.04% |
| 33 | 6.6 | 14.54% |
| 34 | 6.8 | 15.04% |
| 35 | 8 | 15.56% |
Holiday accrual calculation | Enhanced leave (above 12.07%)
When an employee has holiday entitlement above the statutory minimum (over 28 days a year), they will accrue annual leave at a higher rate than 12.07%.
To work this rate out for yourself, you do:
1. Number of holiday days / 5 days a week = number of weeks leave
2. Weeks leave / number of working weeks (which is calculated by doing 52 weeks in a year – number of weeks leave)
So if a worker has 30 days holiday, the calculation would be:
30 days leave / 5 days a week = 6 weeks
6 weeks / (52 weeks – 6 weeks) = 13.04%
Like in the statutory calculation above, the final step is to multiply this percentage to the hours worked in the period. So if this employee with 30 holiday days in a year worked 35 hours in an annual leave period, you would finish by:
35 x 0.1304 = 4.564 hours accrued
Need-to-know annual leave legislation
How do you round up and down in holiday accrual calculations?
Holiday entitlement is to be accrued in blocks of one hour. It must be rounded up to the nearest hour if the entitlement is 0.5 of an hour or more.
- Under 30 minutes = zero hours
- From 30 minutes to 60 minutes = one hour
Above that, the legislation doesn’t tell you how to round up or down, despite you having to do some rounding to reach a whole number of hours and minutes. For example, at what point in the calculation you round up or down can change the final outcome of how much time you give your employee off. Employers should use best intentions to get it right, and be fair across your employee base.
For this reason, we have left our calculator at two decimal places, so employers can make their own choice when applying this figure to what they give to their staff members.
Holiday accrual when on maternity leave
Employees still accrue their usual holiday entitlement while on maternity leave, including any bank holidays (if part of their leave allowance). If you would normally use the 12.07% method for them, then theoretically this would still apply – however this will depend on their contract type and details.
Read our maternity guide here to learn more, and please seek advice if you’re unsure how to apply legislation.
Is holiday accrual lawful in 2025?
Yes, holiday accrual is lawful to use after 1st April 2024 for workers who have these contract types:
- Part-year workers
- Irregular hours workers
- Casual / zero-hour contract workers
In 2022, due to the somewhat controversial Harpur Trust v Brazel case, the 12.07% method was deemed unlawful, which made holiday calculations quite tricky. However, to the delight of HR professionals, legislation came into effect in January 2024 to reinstate the 12.07% method. This has simplified the holiday calculations for these types of workers, which was particularly beneficial to the hospitality and retail industries who often rely on casual workers.
Is rolled-up holiday pay lawful in 2025?
Yes. When new rules were introduced to make the 12.07% method usable once more, using rolled-up holiday pay for irregular hours workers and part-year workers was also made legal to use again.
Other holiday calculation resources
Check out our other calculators to help with your holiday calculations:
Find more information on the government’s guidance on holiday accrual here.
