A warehouse temp who works 38 hours one week and 12 the next is exactly who rolled up holiday pay was brought back for. For leave years starting on or after 1 April 2024, an employment business can pay holiday as it goes to irregular hours and part year workers, instead of working out an average each time they book a day off. Set it up properly and payroll gets simpler. Set it up badly and the agency can end up paying the same holiday twice.
This guide is for the branch manager or payroll lead at an agency supplying temps to warehouses, offices and cleaning contracts.
Who rolled up holiday pay can be used for
The Working Time Regulations, as amended from 1 January 2024, allow it for two groups only. An irregular hours worker is someone whose paid hours in each pay period are, under their contract, wholly or mostly variable. Most zero hours and casual temps sit here. A part year worker works only part of the leave year and has at least one week in it where they are neither required to work nor paid, such as a cleaner who works term time only on a school site.
Fixed hours on a rotating pattern do not count. A temp booked on a standing rota of four nights on and four off for six months has regular hours, even if no two weeks look the same on the timesheet. That worker takes holiday in the usual way, with four weeks paid at normal pay, including regularly worked overtime, and the remaining 1.6 weeks at basic pay.
The Department for Business and Trade guidance on the 2024 reforms makes the point for agency workers directly. The method applies only to an agency worker who meets the worker definition and also the irregular hours or part year definition. Everyone else accrues holiday the usual way. So the first job is to read what each temp’s contract says about hours. Their timesheets alone will not settle it.
How the 12.07 per cent is worked out
Statutory leave is 5.6 weeks. Set against the 46.4 weeks a full year worker is left to work, that comes to 12.07 per cent. For rolled up pay the figure is applied to the worker’s total pay for the pay period, so a temp paid £480 for a week gets £57.94 of holiday pay on top, paid at the same time.
The same percentage is used to accrue leave in hours, rounded to the nearest hour. The two run side by side. Rolled up pay settles the money, and the hours accrued tell the temp how much time off they can take. When they take it, there is nothing further to pay, because the pay went out with their wages.
If your terms give more than the statutory minimum, the percentage changes. It is worked out from the total entitlement against the weeks left to work.
What the payslip has to show
The guidance is specific here. Rolled up holiday pay must appear as a separate item on every payslip, and the worker must be told before it starts that this is how their holiday will be paid. For agency workers it should also be set out in the Key Information Document they receive before agreeing terms.
A payslip showing one blended hourly rate with holiday “included” does not meet that standard. Blended rates were the practice the European Court of Justice ruled against in 2006, which is why rolled up pay was off limits until 2024. If the separate line is missing, a temp can still claim holiday pay they have arguably already received in their rate, and the agency pays twice.
Check your contracts before you switch anyone over. Moving existing temps to rolled up pay may vary their terms, and the guidance advises checking the contract first.
The holiday records you must keep since April 2026
From 6 April 2026, section 35 of the Employment Rights Act 2025 has required employers to keep adequate records showing they have complied with the holiday rules, and to keep them for six years. For a temp on rolled up pay that means a record of the holiday pay paid each period and how it was calculated, the leave accrued, any leave carried over and any payment in lieu at the end of an assignment. Failing to keep adequate records is a criminal offence carrying an unlimited fine.
For an employment business the weak point is usually the join between the timesheet system and payroll. If a temp’s hours are corrected after payroll has run, the holiday line needs correcting too, and the record should show when and why.
When the Fair Work Agency takes on holiday pay
The Fair Work Agency opened on 7 April 2026 and already enforces the rules for employment agencies and employment businesses. Holiday pay is not yet in its remit. The government consulted on how that will work between 30 June and 22 September 2026, and says enforcement will begin in 2027, and not before April.
The consultation proposed notices of underpayment with a civil penalty of 200 per cent of the arrears, capped at £20,000 per worker, and no penalty where an employer pays back all the arrears before an investigation starts. Claims would reach back six years, though not to anything before the Act received Royal Assent on 18 December 2025. Those details may change when the government publishes its response. An agency that cannot rebuild its holiday sums from its own records will be in a poor position once inspectors can ask for them. Our guide to the Fair Work Agency for recruiters covers its wider powers.
Before the next payroll run
Pull a sample of temps on rolled up pay and test each against the two definitions. Look at their last payslip for a separate holiday line at 12.07 per cent of gross pay for the period, and at their Key Information Document for the same wording. Then make sure you could produce a holiday record for each of them going back to April without rebuilding it by hand.
If a client questions what holiday adds to the hourly cost, our breakdown of agency charge rates shows where it sits.
Flamingo Workforce supplies warehouse, office, cleaning and care staff across the UK. If you need cover, send us the details through our enquiry form.