Are UK Bank Holidays Included In Annual Leave?

Bank holidays come around like clockwork, but the rules about how they interact with annual leave can get confusing fast - especially if you employ part-time staff, rotate shifts or open seven days a week.

If you’re putting together your annual leave policy or updating contracts, getting this right will save you headaches later. In this guide, we’ll answer the big question - are bank holidays included in annual leave? - and walk through what to write in your contracts, how to handle part-time patterns, and the dos and don’ts around paying and approving time off under UK law.

Are Bank Holidays Included In Annual Leave Under UK Law?

Short answer: yes, they can be - but it depends on what your contracts and policies say.

Under the Working Time Regulations 1998 (WTR), employees and workers are entitled to a minimum of 5.6 weeks’ paid holiday per leave year. For someone working five days a week, that’s 28 days. There’s no separate statutory right to paid time off on bank holidays. Your contractual terms decide whether bank holidays are:

• Given as extra paid days off on top of the 5.6 weeks; or
• Counted within the 5.6 weeks (i.e. “inclusive of bank holidays”); or
• Required working days with a day off in lieu.

Most UK employers either include bank holidays within the statutory entitlement or offer them as additional contractual leave. Both options are lawful, but clarity in your documentation is essential.

If your contracts state holiday is “inclusive of bank holidays,” then when a bank holiday occurs, it reduces the remaining holiday balance if the worker takes it off. If you instead promise “28 days plus bank holidays,” then bank holidays are on top of the minimum and don’t eat into the statutory allowance.

For a plain-English breakdown of that phrase in contracts, you can use the concept of inclusive of bank holidays as your benchmark when drafting or updating your policy.

One more point of context: “bank holiday” isn’t always the same as a “public holiday”. If your business trades across different parts of the UK, it’s smart to check your dates and terminology. This quick refresher on bank holiday vs public holiday helps avoid mix-ups.

What Should Your Contracts And Policies Say?

The safest way to avoid disputes is to set out exactly how bank holidays work in your Employment Contract and your Staff Handbook. Be explicit about whether the entitlement is inclusive or in addition, who can be required to work bank holidays, and how you allocate and approve time off.

Key Clauses To Cover

• Total Annual Leave: State the number of paid days/weeks. Clarify whether this is inclusive or exclusive of bank holidays.
• Bank Holidays: Specify if your business closes on bank holidays, operates as normal, or runs reduced hours. Confirm whether staff can be required to work and how you compensate (e.g. normal pay, premium pay, day in lieu - whatever your contract offers).
• Request And Approval: Explain how to request leave and the notice required. Keep discretion to refuse leave on business grounds (e.g. peak trading periods) - lawfully and reasonably.
• Part-Time And Irregular Hours: Confirm that leave, including bank holidays, is pro-rated by hours worked, and set out how you’ll handle fixed vs rotating patterns.
• Carry-Over: State your rules. The WTR allow some carry-over in specific cases (e.g. family leave, sickness), but your policy should set the general position clearly.
• Holiday Year: Define start and end dates so entitlements and accrual are easy to calculate.

Much of the day-to-day detail (like request forms, blackout dates and rota rules) can sit in your Staff Handbook so you don’t need to update every contract when your practical processes evolve.

Remember, the WTR set the floor - not the ceiling. You can offer more generous leave than the statutory minimum. Just be clear so you don’t create ambiguity or custom-and-practice rights you didn’t intend.

How Do The Rules Work For Part-Time, Zero-Hours And Variable Shifts?

This is where most employer headaches occur. The legal principle is simple: treat part-time and irregular staff no less favourably and calculate leave on a pro-rata basis. That stems from the WTR and the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.

Part-Time Staff With Fixed Working Days

Giving only “bank holidays off with pay” can unintentionally disadvantage staff who don’t normally work those days. The fair approach is to give a pro-rated annual leave pot measured in hours, so employees can choose to use it on bank holidays if those fall on their normal working day.

Example: If your full-time entitlement is 28 days inclusive of bank holidays, a 3-day-per-week employee would receive 3/5ths of 28 days, typically converted into hours. When a bank holiday lands on their usual day, they book the relevant hours from their balance. If a bank holiday falls on a non-working day, they don’t “lose out” - they still have their full pro-rated entitlement to use elsewhere.

If you want to get into the weeds of this particular scenario, here’s a deeper look at what happens when a non-working day falls on a bank holiday and how to manage expectations.

Zero-Hours Or Irregular Hours

For casual or variable hours workers, calculate holiday accrual based on hours worked. Historically, many employers used 12.07% as a shorthand for statutory entitlement, but recent case law and updated guidance emphasise using a reference period to calculate “normal” hours for leave pay. In practice, keep clear records of hours and apply a consistent, lawful method to accrue leave and pay for it.

Shift Patterns And Rotas

Where your business runs a rota, try to allocate bank holiday shifts fairly across the team. Use an hours-based holiday pot and allow staff to book a day or part-day off from their balance when a bank holiday falls on their assigned shift.

Always record how you’ve calculated entitlements and applied them in practice. If challenged, you’ll want to show you followed the WTR and treated staff even-handedly.

Managing Requests, Closures And Rotas On Bank Holidays

You can require employees to take annual leave on specific days - including bank holidays - if your contracts and policies allow it. The WTR permit employers to give notice instructing staff to take leave on particular dates, provided you give at least twice as many days’ notice as the leave you require them to take. For example, to require one day of leave (for a bank holiday closure), give at least two days’ notice.

Conversely, you can refuse leave requests for legitimate business reasons. That said, apply your policy consistently and reasonably to avoid grievances or discrimination risks. If you’re not sure where the line is, this Q&A on when you can refuse annual leave covers the basic rules.

If You Close On Bank Holidays

• Say so in your contracts and handbook.
• Specify whether those days are deducted from leave (inclusive) or are additional paid days off.
• Give adequate notice each year of your closure dates and how they interact with leave balances.

If You Trade On Bank Holidays

• Clarify who can be required to work and how you select volunteers.
• Set out any premium pay or time off in lieu (if you offer it) - this is a contractual choice, not a statutory right.
• Explain how rota preferences are gathered and approved to ensure fairness and business coverage.

Remember to plan ahead for overlapping events like Christmas and New Year, when multiple bank holidays land close together and demand may spike for retailers, hospitality and logistics.

Paying For Bank Holidays And Calculating Holiday Pay

Holiday pay must reflect “normal remuneration”. In plain English, when staff take a paid holiday (including bank holidays if these are within their leave), they should receive what they’d normally earn - not just basic pay. This typically includes regular overtime, commission or allowances that form part of their usual earnings pattern.

Practical tips for employers:

• Use a reference period: For irregular earnings, calculate an average over a statutory reference period (usually 52 paid weeks, excluding weeks with no pay) to determine holiday pay.
• Document your approach: Write down how you calculate holiday pay and apply it consistently across comparable staff groups.
• Keep the maths transparent: Employees who understand your method are less likely to dispute it.

If you pay a premium for working bank holidays (again, this is contractual), make sure your policy makes clear whether that premium applies only when working on the day or also affects holiday pay. Distinguish between “pay for working the day” and “pay for taking the day as holiday”.

One final money point: if an employee has overtaken their accrued holiday and leaves part-way through the year, you may be able to make a lawful deduction from final pay to recoup the overused amount - but only if your contract permits it and the deduction is lawful. Familiarise yourself with the rules on wage deductions before you act.

Legal Checkpoints And Common Pitfalls To Avoid

Here are the risks we see most often and how to sidestep them.

1) Not Being Clear In Contracts

Ambiguity around “inclusive” vs “in addition to” invites disputes and, over time, can evolve into a “custom and practice” entitlement that’s hard to row back. Make your terms explicit in the Employment Contract and mirror them in your handbook.

2) Unfair Impact On Part-Time Staff

Automatically giving paid bank holidays only to those who happen to work Mondays disadvantages people whose schedules don’t align with those dates. Use an hours-based entitlement and let staff book from their pot. This aligns with the WTR and the principle of not treating part-time workers less favourably.

3) Rejecting Leave Without Good Reason

You can refuse requests, but not arbitrarily. Build a fair system, apply it consistently, and keep records. Your lawful discretion is stronger if your policy is clear and you can show why the business needed to refuse leave on specific dates.

4) Forgetting The Working Time Rules

Bank holidays don’t change your core obligations on working time, rest breaks and weekly limits. Keep an eye on the Working Time Regulations if you’re scheduling longer shifts or back-to-back rotas to cover holiday trading.

5) Getting Holiday Pay Wrong

Paying only basic pay for holidays when someone regularly earns supplemental elements can lead to underpayments and claims. Use a 52-week reference period for irregular pay and make sure “normal remuneration” is reflected in holiday pay.

6) Overlooking Equality Risks

Be mindful of equality considerations under the Equality Act 2010. For example, if you prioritise certain religious bank holidays for some but not others without a fair, objective reason, you could face discrimination allegations. A neutral, transparent policy applied consistently is your best protection.

7) Poor Communication Around Rotas

Surprises frustrate teams. Publish your bank holiday approach each year, confirm your closure/trading days well in advance, and give everyone a fair shot at requesting time off. Good communication goes a long way in reducing conflict.

8) Assuming All Bank Holidays Are The Same

Some years include additional bank holidays (for national events). Your contract should say how you’ll handle “extra” bank holidays to avoid last-minute confusion. A straightforward clause can confirm whether extra bank holidays are included within the existing entitlement or handled separately.

Putting It All Together: A Simple Employer Playbook

If you’re updating your approach, here’s a practical sequence to follow.

1. Decide Your Model: Will bank holidays be included within the 5.6 weeks, or given in addition? Will you close or trade on those days? Make these commercial calls first.
2. Update Contracts And Policies: Reflect your decisions clearly in your Employment Contract and Staff Handbook. Keep detailed mechanics (like rota process) in your handbook for flexibility.
3. Set Fair Rules For Part-Time And Irregular Hours: Move to an hours-based entitlement for everyone and document how you calculate accrual and holiday pay.
4. Build A Clear Approval Process: Set timelines for requests, point to business needs as a legitimate reason to refuse, and explain any “blackout” periods. If in doubt, check when you can lawfully refuse annual leave.
5. Train Managers: Make sure supervisors understand your rules, especially around pro-rating leave and calculating holiday pay.
6. Communicate Early Each Year: Publish closure dates, trading plans and rota principles so staff can plan their leave.
7. Review After Peak Periods: After major bank holiday trading (Easter, Christmas), review what worked and where to improve.

If your business regularly operates at weekends, your bank holiday plan should dovetail with your approach to regular Saturday/Sunday staffing. It’s also worth aligning your policy with any rules you maintain for weekend shifts to keep everything consistent.

Key Takeaways

• The WTR provide 5.6 weeks’ paid holiday as a minimum; there’s no separate statutory right to paid bank holidays.
• Whether bank holidays are included in annual leave or given in addition is a contractual choice - say it clearly in your documents.
• For part-time and irregular hours staff, use hours-based entitlements and pro-rating so bank holidays don’t unfairly advantage or disadvantage anyone.
• You can require leave on bank holidays (for closures) and you can refuse requests on business grounds - just follow reasonable notice rules and apply your policy consistently.
• Holiday pay must reflect normal remuneration; for irregular earnings use a transparent reference period method.
• Avoid common pitfalls by aligning your contracts, Staff Handbook, scheduling practices and communications. Keep an eye on the Working Time Regulations and ensure any deductions or adjustments (e.g. for overused leave) are contractually permitted and lawful.

If you’d like help drafting or updating your contracts and policies so you’re protected from day one, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.