Christmas Holiday Pay for UK Employers

Christmas holiday pay can raise a number of questions for employers, particularly where annual leave, bank holidays and seasonal working patterns overlap. From managing Christmas Day and Boxing Day working arrangements to calculating holiday pay for employees with variable earnings, it is important that employers understand both their legal obligations and any contractual commitments they have made to their workforce.

Christmas can also bring additional considerations, including business shutdowns, increased overtime requirements and higher use of temporary or seasonal workers. Reviewing holiday policies, contractual terms and Christmas holiday pay calculations in advance can help employers manage employee expectations, reduce the risk of disputes and ensure compliance with employment law requirements throughout the festive season.

Employment Law Christmas Round Up

During the festive season at work spirits are heightened, Christmas jumpers are out in full force and tubs of celebrations and quality street litter the counterspace. While it is a joyous and fun occasion for those who celebrate, there are still a number of things employers should be wary of to ensure a smooth sailing festive season. Read more >

Do employees get extra pay for working on Christmas Day in the UK?

There is no statutory or automatic requirement for enhanced pay if employees are required to work on Christmas Day, meaning any additional pay or holiday premium is at the employer’s discretion. Enhanced holiday pay for Christmas work is common in many industries to acknowledge the holiday, but it is not mandatory unless specified in an employee’s contract or within the company policy. Employers are therefore advised to review contract terms carefully. If Christmas Day is considered part of statutory holiday entitlement, this should be clearly articulated to avoid misunderstandings.

Can employers require staff to work on Christmas Day?

If an employer requires staff to work on Christmas Day, it is important to communicate this expectation clearly and in advance. Whether an employee has to work on Christmas Day may depend on the industry they work in and for many industries (such as travel and hospitality) it is a commercial or operational necessity.

As set out in the Working Time Regulations 1998, employers must give notice that is at least twice the length of the holiday period being requested to work. For example, if the employer needs an employee to work on Christmas Day instead of taking leave, at least two calendar days’ notice would be required. There are no explicit requirements about the form this notice must take and it does not need to be in writing. However, best practice often involves setting these expectations months in advance.

An employer may refuse a request for annual leave over the Christmas period by giving counter-notice under the Working Time Regulations 1998. The counter-notice must be at least as long as the period of leave requested. For example, a request for one day’s leave may be refused provided the employer gives at least one day’s notice before the leave is due to start.

Are employees entitled to paid time off on Christmas Day and Boxing Day?

Not automatically. There is no statutory right to paid time off on bank holidays, including Christmas Day and Boxing Day. Whether these days are paid holidays depends entirely on the terms of the employee’s contract or company policy. Employers can review the government’s guidance on holiday entitlement and bank holidays.

Can employers require employees to take holiday during the Christmas period?

Yes, employers can require staff to take annual leave at specific times (such as Christmas), but they must give notice that is at least twice the length of the leave period being enforced. This should also be clearly stated in the employment contract or staff handbook.

Christmas shutdowns and annual leave

Many employers choose to close their offices or operations between Christmas and the new year. Although this can be an effective way of managing staffing levels during a quieter period, employers should ensure that any Christmas shutdown arrangements are handled correctly.

Employers can generally require employees to use part of their annual leave entitlement during a Christmas closure, provided sufficient notice is given. As with any requirement to take annual leave on specific dates, notice must usually be at least twice the length of the period of leave being imposed.

Employers should also consider employees who may not have accrued enough holiday entitlement to cover the shutdown period. This is particularly relevant for new starters, part-time employees or those returning from periods of absence. The approach to these situations should be clearly communicated and reflected in contractual documentation and workplace policies.

Planning Christmas shutdown arrangements well in advance can help employers avoid confusion, manage employee expectations and reduce the risk of disagreements during the festive period.

How to calculate Christmas holiday pay correctly

How does holiday pay affect part-time, seasonal or irregular hours workers who work overtime?

Part-time, seasonal and irregular hours workers with fluctuating overtime hours are entitled to holiday pay that reflects their average earnings, just as full-time employees are. If these workers have consistently and regularly worked overtime, this must be included in their holiday pay calculation.

The effect of overtime on holiday pay depends on whether the worker is classified as an irregular hours’ worker or part-year worker under the Working Time Regulations. For part-time workers with fixed contractual hours who work overtime, their statutory holiday entitlement remains at 5.6 weeks per year regardless of overtime worked, but regularly paid overtime must be included in holiday pay calculations for their 4 weeks’ regulation 13 holiday. For irregular hours and part-year workers, overtime results in additional holiday accrual at the rate of 12.07% of the overtime hours worked, and this overtime is reflected in holiday pay either through averaging calculations or rolled-up holiday pay.

To manage expectations, employers should clearly explain to part-time, irregular hours, and seasonal workers how their holiday pay is calculated, especially when it includes irregular or seasonal overtime.

How should holiday pay be calculated for employees with fluctuating overtime?

For employees with fluctuating overtime, the method of calculating holiday depends on whether they have normal working hours. From 1 January 2024, overtime payments that have been regularly paid to a worker in the 52 weeks preceding the calculation date must be included in holiday pay calculations for the 4 weeks’ statutory annual leave derived from the Working Time Directive under regulation 13, but do not need to be included for the additional 1.6 weeks’ leave under regulation 13A of the Working Time Regulations. The calculation involves averaging the overtime payments over a 52-week reference period and adding this amount to the worker’s basic pay.

By carefully reviewing holiday pay calculations and employment contracts, employers can ensure fair and transparent practices that support employee morale and compliance with holiday pay regulations.

If your organisation relies on temporary or seasonal workers to meet increased demand, it is equally important to understand the wider employment rights that apply. Read our guide on seasonal workers’ rights.

What happens if holiday pay is calculated incorrectly?

Calculating holiday pay incorrectly can expose employers to a range of workforce and legal issues, particularly where overtime, commission or other regular payments have not been taken into account. Whilst errors are often unintentional, they can still lead to disputes if employees believe they have received less holiday pay than they are entitled to.

Employees may be able to bring claims for unlawful deductions from wages and/or breach of contract where holiday pay has been underpaid. In some circumstances, employers may also face grievances, increased employee dissatisfaction and the administrative burden of reviewing historic holiday pay calculations.

Businesses that rely heavily on overtime, seasonal workers or variable working patterns may face an increased risk of errors, particularly during busy periods, such as Christmas. Reviewing holiday pay calculations regularly can help identify issues early and ensure payments accurately reflect a worker’s normal earnings.

Where concerns arise regarding holiday pay calculations, employers should seek advice promptly to understand their obligations and minimise the risk of future disputes.

Holiday carry over and record-keeping

Employees may be entitled to carry forward statutory leave where, for example, they were unable to take it because of family-related leave or sickness, or the employer failed to provide a reasonable opportunity to take leave and warn that it would otherwise be lost. Employers should therefore give employees a genuine opportunity to take statutory leave and issue clear, timely reminders before the leave year ends.

From 6 April 2026, employers must keep detailed records of annual leave and holiday pay for at least six years from the date the records are made. Records should include the annual leave taken and holiday pay paid. Employers should ensure that payroll and HR systems can demonstrate compliance, as failure to show that adequate records are kept may result in a fine.

What should employers review before Christmas?

The weeks leading up to Christmas can create a number of employment law and workforce management challenges. Increased annual leave requests, overtime demands, Christmas shutdowns and seasonal staffing arrangements can all affect holiday pay obligations and employee expectations.

Taking time to review policies and payroll processes before the festive period can help employers reduce the risk of disputes and ensure compliance with holiday pay requirements. Areas worth reviewing include:

• Employment contracts: check whether contracts clearly set out annual leave entitlement, treatment of bank holidays, overtime arrangements and any enhanced pay provisions for Christmas working.
• Holiday and absence policies: ensure policies explain how annual leave is approved, whether employees may be required to take leave during shutdown periods and what notice will be given.
• Holiday pay calculations: review the approach used to calculate holiday pay for part-time employees and employees with variable earnings, including those who regularly work overtime or have seasonal fluctuations in pay.
• Christmas shutdown arrangements: confirm closure periods, holiday requirements and contingency plans for employees who may not have sufficient accrued leave to cover the shutdown.
• Seasonal and temporary worker arrangements: check that holiday entitlement and holiday pay calculations for temporary and irregular hours workers are being managed consistently and in accordance with current requirements.
• Workforce communication: provide clear information to employees about Christmas working arrangements, leave expectations and any changes to operating hours well in advance.

Alongside holiday pay, many employers choose to recognise employee contributions through festive bonuses or gifts. Our article on discretionary bonuses explains some of the key considerations.

Key takeaways for employers

Reviewing contracts, policies and payroll processes ahead of the festive period can help employers manage Christmas holiday pay correctly Where employers are unsure how holiday pay rules apply to their workforce, seeking advice at an early stage can help avoid costly issues later.

If you would like to discuss holiday pay calculations, Christmas working arrangements or annual leave management, our employment law team can provide tailored guidance based on your organisation’s circumstances.

This content is provided for general informational purposes only and does not constitute legal advice. It is not intended to address the circumstances of any individual or entity, nor should it be relied upon as a substitute for specific advice from a qualified solicitor. The information reflects the legal position as at the date specified and may be subject to change. If you require advice on a specific matter, please contact us directly.