Average Holiday Pay



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Original Consultation Proposal


The Single Status agreement in 2012 removed the provision of contractual overtime. It is however recognised that overtime and additional hours are worked by a number of staff working within a range of services.

On 6 April 2020 new legislation was introduced which increased the holiday pay reference period from 12 weeks to 52 weeks. This change was an opportunity for the Council to review the current holiday pay arrangements in place for employees.


The key principle of holiday pay is that:

‘Holiday pay is based on the principle that a worker should not suffer financially for taking holiday. The pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work.’


Current Arrangement

The current holiday pay arrangement in place in Ceredigion Council is referred to as ‘rolled up holiday pay’. This is where an additional amount is paid on top of an employee’s normal hourly rate when they work additional hours/overtime. This additional amount is paid as a percentage (based on the employee’s length of service) and is paid at the same time as the additional hours/overtime is paid.

Proposed Arrangement

Following a review of our current arrangement and the introduction of new legislation it is proposed to undertake the following changes:

  • To replace the payment of rolled up holiday pay at the point of earning with a calculation of an employee’s average pay (normal salary, overtime and any other regular additional payments) over a rolling 12 month reference period
  • To ensure that relief workers accrue, book and take holidays
  • To ensure that all employees receive average pay when they are on holiday

Included in this proposal are the following decisions:

How many days to pay average holiday pay
Statutory leave is the minimum amount of leave entitlement required by law, this is currently 28 days (which includes 8 bank holidays). Our minimum leave entitlement is 34 days (minimum 26 days annual leave and 8 bank holidays). The legislation states that we must pay average holiday pay for the statutory leave, but the decision of whether to pay average holiday pay for occupational leave is at the employers’ discretion.

It has been agreed that to ensure fairness that average holiday pay will be applied for both statutory and occupational leave, meaning that employees will receive average holiday pay for all holidays taken.

Which payments to include in the calculation of average pay
The guidance and legislation states that only regular additional hours / overtime should be included in the calculation of average pay, however there is no clear definition of what is and what isn’t regular.

It has been agreed that to ensure fairness and for ease of understanding and calculation that all additional hours and overtime will be included in the calculation of average pay.

Which reference period to used
The reference period is the period used to calculate an employee’s average pay. The guidance and legislation states that the reference period should now be 52 paid weeks (1 year), and in the instance where an employee has not received pay for a particular week then the calculation should be extended to include up to a maximum of 104 weeks (2 years). Ceredigion County Council, along with many other organisations calculate and process pay on a monthly basis, and therefore the most suitable approach is to use 12 paid months, instead of 52 weeks.

It has been agreed that for ease of calculation and understanding that the reference period will be based on paid months as opposed to paid weeks.


The following employee groups will be subject to the proposed arrangements:

  • Employees who have a relief contract (zero hours)
  • Employees who have contracted hours and take annual leave

The following employee groups will not be subject to the proposed arrangements:

  • Employees who have a term time weeks contract
    as the calculation of holiday pay is included in their annual salary
  • Teachers
    due to teachers’ terms and conditions including a calculation for holidays


It is proposed to implement these changes from 1 February 2021.