Holiday Pay When You Resign in the UK — What You're Actually Owed

Here's something that doesn't get talked about nearly enough: most people in the UK leave money behind when they quit their job.

Not because they don't deserve it. Because they don't check.

Your employer owes you money for any holiday you've earned but not taken. That's the law. But the amount that actually shows up in your final pay packet? That depends entirely on whether you've done the maths yourself — and whether you've made it clear you expect a proper payout.

The basics: how holiday accrual works

Under the Working Time Regulations 1998, every worker in the UK is entitled to 5.6 weeks of paid holiday per year. For a full-time employee working five days a week, that's 28 days (including bank holidays, unless your contract gives them on top).

This entitlement doesn't land in your account on January 1st. It builds up gradually throughout the year. If your holiday year runs January to December and you resign on 30 June, you've accrued roughly half your annual entitlement — about 14 days.

Take away however many days you've already used, and whatever's left is what your employer owes you in your final pay.

Simple enough in theory. In practice, it's where things go wrong.

How to calculate what you're owed

Let's walk through a real example.

Nearly seven hundred quid. Not a trivial amount — and that's someone resigning barely three months into the year. Resign later, or have a higher salary, and the number climbs fast.

The formula (for anyone who wants the maths)

The standard approach, and the one ACAS recommends, is:

For part-months, you can either round up, prorate by days, or use the 1/260th method (dividing annual entitlement by 260 working days and multiplying by the number of days worked). There's no single "correct" method in law — but your employer should be using a consistent one, and you should check which one they've used.

If they've rounded down, that's the first place you're losing money.

What if you've taken more holiday than you've accrued?

This catches people off guard. If your employer let you take your full 28 days upfront and you resign halfway through the year, you've technically been overpaid.

Can they claw it back? Only if your contract says so. Look for a clause about "holiday overpayment" or "deductions from final salary." If it's in your contract, they can deduct the overpayment from your last pay. If it's not, they'll struggle to recover it — but they might try anyway, so it's worth knowing where you stand.

Most contracts do include this clause, by the way. It's standard.

The mistakes that cost people money

1. Not checking the final payslip properly

Your final payslip should have a line showing holiday pay. Many people glance at the total, see it's roughly what they expected, and move on. That's a mistake. You should be comparing the number of days paid against your own calculation. Even a single day's difference could mean £100–200 missing.

2. Assuming HR has done it correctly

HR departments process dozens of leavers. Mistakes happen. Sometimes the holiday system hasn't been updated. Sometimes bank holidays are counted wrong. Sometimes the accrual calculation uses the wrong start date. You're the only person with a direct financial incentive to get this right — so do the maths yourself.

3. Not mentioning holiday pay in the resignation letter

This is the big one. If your resignation letter says nothing about holiday pay, some payroll teams will just run the standard leaver process and hope for the best. By explicitly stating that you expect a full reconciliation of your accrued holiday entitlement, you're putting it on record. It's not aggressive — it's sensible.

4. Forgetting you accrue holiday during your notice period

Your notice period is still employment. You continue to accrue holiday during it. If you're working a three-month notice period, that's an extra quarter of your annual entitlement building up. Many people (and some employers) forget to include this in the final calculation.

Can you take holiday during your notice period?

Yes. You can request holiday during your notice, and your employer can also require you to take it. They need to give you notice equal to double the holiday length (so to force you to take 5 days off, they need to give you 10 days' notice).

Some employers prefer this — it's cheaper than paying out unused days. Others would rather you work your full notice to finish handover. Either way, any holiday you don't take must be paid.

One thing to watch: if your employer makes you take holiday during notice, that reduces the payout but also means fewer days at work. Could work in your favour if you've got another job lined up and want to create a gap between roles.

What about bank holidays?

This depends on your contract. There are two common setups:

• "28 days including bank holidays" — your 8 bank holidays are part of the 28-day total. Straightforward.
• "20 days plus bank holidays" — you get 20 discretionary days plus 8 bank holidays on top. You accrue all 28 proportionally.

The confusion arises when you resign partway through the year. If a bank holiday falls during a month you've already worked, you're entitled to it. If it falls after you've left, you're not. Your employer should prorate bank holidays the same way they prorate your regular holiday — but not all of them do.

What if your employer doesn't pay?

If your employer underpays your holiday or doesn't pay it at all, you have options:

1. Raise it informally first. Email HR or payroll, point out the discrepancy, and show your workings. Most of the time this is a genuine mistake and they'll correct it.
2. Put it in writing formally. If they don't respond, send a formal letter (or email) stating the amount owed and giving them a deadline — 14 days is reasonable.
3. ACAS early conciliation. Before you can take legal action, you must contact ACAS for early conciliation. It's free and often resolves things without going further.
4. Employment tribunal. If conciliation fails, you can bring a claim for unlawful deduction of wages. The time limit is 3 months minus one day from your last pay date, so don't sit on it.

For amounts under a couple of thousand, the process is straightforward and you don't need a solicitor. The threat of a tribunal claim alone is usually enough to get employers to pay up.

Frequently Asked Questions

Do I get paid for holiday I didn't take?

Yes. Under the Working Time Regulations, your employer must pay you for any holiday you've accrued but not taken by your leave date. This is a legal requirement, not a company perk.

Is holiday pay included in my final pay automatically?

It should be, but don't assume it will be correct. Always calculate your own figure and compare it against what appears on your final payslip. Discrepancies are common.

How is holiday pay calculated — on basic pay or total pay?

Following several court cases (most notably British Gas Trading v Lock and the Harpur Trust v Brazel Supreme Court ruling), holiday pay should reflect your normal earnings — not just basic salary. If you regularly earn commission, overtime, or allowances, those should be factored in. This is an area where employers frequently underpay.

What if my employer says I've taken too much holiday?

They can only deduct the overpayment from your final salary if your contract explicitly allows it. Check the wording carefully. If there's no deduction clause, they can ask you to repay it voluntarily — but they can't just take it.

How long does my employer have to pay me?

Holiday pay should be included in your final pay, which is normally processed on your usual pay date after your last day. If it's not there, chase it immediately — the 3-month tribunal deadline starts ticking from the date the payment was due.

Quick checklist before you resign

1. Check your contract for your holiday entitlement and the holiday year dates
2. Log in to your HR system and note how many days you've taken so far
3. Calculate your accrued entitlement up to (and including) your notice period
4. Work out the difference — that's what you're owed
5. Include a holiday pay clause in your resignation letter
6. Compare your calculation against your final payslip when it arrives
7. If there's a shortfall, raise it with payroll within the first week