Pay received by employees during their annual leave.
Holiday pay is the payment employees receive when taking their statutory or contractual annual leave. In the UK, employees are entitled to receive their normal pay during holiday. For workers with variable pay (overtime, commission, regular allowances), holiday pay must reflect average earnings over a 52-week reference period, following Supreme Court rulings in 2014-2019. Payroll software automates holiday pay calculations — including correct treatment of variable pay components — to ensure compliance.
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