How to handle bank holidays in payroll

Bank holidays cause more payroll queries than almost anything else, because they hit three different things at once: how much leave someone is entitled to, how much they are paid if they work the day, and when the pay run itself actually lands. Treating those as one question is where mistakes start. This guide separates them and sets out the rules and the practical steps for each.

None of this is a substitute for advice on a specific case, and the figures below are illustrative — but the framework is the one most UK payroll and HR teams work to.

Start with the contract

There is no automatic right to take bank holidays off, and no automatic right to enhanced pay for working them. Both depend on the employment contract. So before any calculation, establish what the contract says: are bank holidays given off in addition to annual leave, included within the annual leave allowance, or not mentioned? Is there an enhanced rate for working them, or just normal pay? Everything downstream flows from those answers.

Where the contract is silent, custom and practice and the guidance from ACAS become relevant. ACAS consistently recommends putting the position in writing so there is no doubt — it removes most disputes before they start.

Bank holidays and the 5.6-week minimum

Almost all workers are entitled to 5.6 weeks of paid statutory leave a year — 28 days for a five-day-a-week worker, capped at 28 even for those working six days. The gov.uk holiday entitlement guidance confirms that an employer can lawfully count bank holidays towards that 5.6 weeks.

That gives two common models. In the first, the eight England & Wales bank holidays are included within the 28 days, leaving 20 days of discretionary leave. In the second, bank holidays are given on top, so the worker effectively gets 28 plus 8. Both are lawful; what matters is that the contract is clear about which applies, and that whichever model is used still delivers at least the 5.6-week minimum. A worker in a region with more bank holidays, such as Northern Ireland, must still receive the statutory minimum at least.

Part-time workers and pro-rata

Part-time workers must not be treated less favourably than comparable full-timers. Because most bank holidays fall on a Monday, a strict "day off on the day" approach distorts things: a part-timer who works Mondays could get every bank holiday, while one who never works Mondays could get none. Neither is fair.

The standard fix is to give part-timers a pro-rata bank holiday entitlement based on their contracted hours or days, expressed in hours and deducted from a single leave pot regardless of which day a holiday falls on. For example, someone working three days a week gets three-fifths of the full-time bank holiday allowance, and books it as leave whether or not they would have worked that particular Monday. This keeps the treatment even across the workforce.

Irregular-hours and part-year workers

Workers with no fixed pattern — irregular-hours and part-year staff such as some zero-hours, casual, and term-time workers — are the hardest group to get right, and the rules in this area changed.

For leave years beginning on or after 1 April 2024, the government introduced a method under which holiday entitlement for irregular-hours and part-year workers accrues at 12.07% of the hours worked in a pay period, and permitted rolled-up holiday pay (an uplift paid with each payslip) for these groups. The 12.07% figure comes from the fact that 5.6 weeks of leave is 12.07% of the 46.4 working weeks in the rest of the year. This reversed, for these specific groups, the position that had followed the Supreme Court decision in Harpur Trust v Brazel, under which part-year workers could not have their entitlement pro-rated down in the same way.

This is genuinely intricate, and bank holidays interact with it differently than they do for fixed-hours staff. Rather than reproduce the full mechanics here, we maintain a dedicated tool and explainer on the UK Holiday Pay Calculator, which covers the 12.07% accrual, the 52-week reference period for variable pay, and rolled-up pay in detail. If your question is about how much leave or pay an irregular-hours worker is owed, work from there.

Pay for working a bank holiday

There is no legal requirement to pay more for working a bank holiday — no statutory time-and-a-half or double time. If a worker is entitled to enhanced pay, it is because the contract says so. Where it does, payroll needs to know the trigger (does it apply to all bank holidays or only some?), the rate, and whether a day off in lieu is offered instead of, or as well as, the enhancement.

For salaried staff who simply take the day off, there is usually nothing to do — salary is unaffected. The processing work concentrates on those who work the day, those on hourly or variable pay, and anyone taking a day in lieu, all of which need to be coded correctly so the payslip and the leave record agree.

One further point on the rate of holiday pay itself: a day of leave should be paid at the worker's normal rate of pay, and for anyone whose pay varies — through commission, regular overtime, or shift premiums — that normal rate is worked out using an averaging reference period of up to 52 weeks. So if a worker takes a bank holiday as paid leave and their pay fluctuates, the amount is not simply their basic daily rate. This is a frequent source of underpayment, and it applies to bank-holiday leave just as it does to any other statutory leave.

When a holiday falls on a non-working day

If a bank holiday falls on a day a worker would not have worked anyway — a Saturday for a Monday-to-Friday worker, or a non-working day for a part-timer — the fair approach, and the one a pro-rata hours model delivers automatically, is that they still receive the value of that holiday as leave to take another time. Handling it on the actual date alone would short-change anyone whose pattern does not line up with the calendar. Remember too that a fixed holiday falling at a weekend generates a substitute weekday, and it is the substitute that is the bank holiday for these purposes.

Pay dates and BACS timetables

Even when entitlement and pay are settled, bank holidays move the pay run itself. BACS — the system most salaries are paid through — operates on a three-working-day cycle and does not process on bank holidays. So a payment that would normally credit on a bank holiday, or whose three-day cycle straddles one, needs to be submitted earlier to land on time.

In practice this means: identify any pay date that falls on, or just after, a bank holiday; count back the required BACS working days using the correct regional calendar; and bring the submission and any approval cut-offs forward accordingly. The festive period needs the most planning, because Christmas Day, Boxing Day, substitute days, and New Year can remove most of a week's processing days. Use the business days calculator to count BACS lead times around a holiday, and the days-between-dates tool to check how many processing days really sit between a cut-off and a pay date.

Many employers choose to pay early when a pay date is affected, particularly in December. If you do, communicate it clearly — an unexpected early or late credit generates as many queries as the holiday itself.

Records, policy, and consistency

The thread running through all of this is consistency. Decide the model — included or on top, pro-rata basis, enhancement rules, pay-date policy — write it down, and apply it the same way every year. Keep leave records in hours rather than days where patterns vary, so part-timers and irregular-hours staff are treated correctly. Review the policy when the law changes, as it did for irregular-hours workers in 2024, and when the government proclaims a one-off bank holiday that your contracts may or may not pick up automatically.

Payroll checklist

• Confirm whether bank holidays are included in, or on top of, the 5.6-week entitlement.
• Apply a pro-rata, hours-based allowance for part-time workers.
• Use the correct method for irregular-hours and part-year workers, and check entitlement on the sister site.
• Check the contract before paying any enhancement for working a bank holiday.
• Make sure workers whose pattern misses a holiday still get its value.
• Bring BACS submissions forward to clear the bank holidays, especially over Christmas.
• Document the policy and apply it consistently year to year.

Handled methodically, bank holidays are routine. The trouble comes from blending entitlement, pay, and timing into one decision — keep them separate and each is manageable.