Holiday Pay in Schools and Academy Trusts: A Practical Guide for School and MATS

Our Schools HR team has seen a marked increase in queries relating to holiday entitlement and pay in recent months. This is particularly in light of the Employment Rights Act 2025 (“ERA 2025”) introducing, from 6 April 2026, a new legal requirement for employers to keep detailed records of statutory holiday entitlement, leave taken and holiday pay for a period of six years. We are also aware that the Fair Work Agency / HMRC has begun auditing schools to assess compliance with these obligations.

This briefing note provides an overview of the current rules on holiday entitlement and pay relevant to schools, together with the key changes introduced by ERA 2025.

Holiday entitlement

All full-time workers in the UK are entitled to a statutory minimum paid holiday entitlement of 5.6 weeks each year under the Working Time Regulations 1998 (“WTR 1998”). The 5.6 weeks’ entitlement is made up of 4 weeks of EU-derived entitlement under the EU Working Time Directive, and 1.6 weeks under the WTR 1998 domestic law.

Holiday entitlement starts to accrue from the first day of employment.

Schools and MATs should note the following in respect of holiday entitlement and pay:

1. The 5.6 weeks mentioned above is the statutory minimum.
2. Where the school or MAT employ support staff under the National Agreement on Pay and Conditions of Service for Local Government Services (“Green Book”) holiday entitlement will likely be more than the statutory minimum of 5.6 weeks.
3. Those on casual or zero hours contract will be entitled to the statutory minimum of 5.6 weeks. Peripatetic teachers may also be in scope depending on how they are engaged by the school.
4. Entitlements may be different for full time all year round support staff, as compared to those staff who are part-time, term time only or work irregular hours.
5. In the case of teaching staff, their entitlement is the 5.6 weeks statutory minimum, and their holiday is deemed taken during periods of school closure. Their nationally negotiated pay includes an element of holiday pay and they are paid in twelve equal monthly instalments including when they are not working because school is closed.

Schools and MATS should specify the holiday year in contracts of employment.  Otherwise, each worker’s holiday simply starts on their first working day which may cause an unnecessary administrative burden and create disparity across the workforce. Most schools and MATs adopt a standard holiday year for all staff to calculate holiday entitlements, which in practice usually aligns to the academic year (i.e. 1 September to 31 August).

Full-time and regular hours staff generally receive their full annual entitlement at the start of the holiday year. By contrast, irregular hours and part-year workers accrue holiday as they work. In the first year of employment, all workers are treated as accruing leave monthly and cannot take more than they have built up. Where employment ends part way through the year, entitlement is recalculated on a pro-rata basis.

In the majority of cases disputes around holiday entitlement and pay in a school context tend to relate to support staff or casual/zero hours workers.

Taking Holiday

Workers must give notice when they want to take leave, and School and MATS may refuse or require leave to be taken on an alternative date by giving the appropriate counter-notice. As a default position, workers must give notice of at least twice the length of the leave requested, and School and MATS must give equivalent notice to require leave or refuse requests.

For teachers, school closure periods essentially set when leave can be taken. Schools and MATs should still clearly communicate any restricted periods or required shutdowns in advance.

There is no statutory right to take Bank Holidays off. Whether these are included within holiday entitlement or provided in addition depends on the contract. For part-time staff, a common and lawful approach is to provide a pro-rated total annual leave allowance inclusive of Bank Holidays, ensuring overall proportionality and parity in treatment.

Holiday During Sickness

Statutory holiday entitlement continues to accrue during sickness absence and cannot be reduced.

Workers can:

• take holiday while off sick; or
• choose to reschedule holiday if they fall ill during a period of leave.

Any rules regarding carryover of untaken holiday, where the worker was prevented from taking it due to sickness absence, are disregarded in respect of only the 4 weeks EU-derived statutory holiday mentioned above. Up to four weeks of unused EU-derived statutory leave may be carried forward for up to 18 months where it could not be taken due to sickness. School and MATs should exercise caution when requiring staff on sick leave to take holiday, particularly where health or disability issues arise. However, where a worker asks to take their holiday as a means of mitigating the financial impact of their absence, which may arise where they have exhausted their sick pay entitlements, it is possible for this to be accommodated.

Family Leave

Similarly, employees on maternity, paternity, adoption or shared parental leave continue to accrue holiday in full. However, holiday cannot be taken at the same time as family leave and must instead be taken before or after the leave period, with carry-over permitted where necessary.

Unused Holiday, Payment in Lieu and Carry Forward

Holidays should normally be taken in the holiday year when they accrued (with the exceptions of carrying forward unused leave noted above), and payment in lieu is only permitted when employment ends. Importantly, if an employer does not enable or encourage workers to take their leave, or fails to warn that it may be lost, statutory holiday may carry forward indefinitely. This can create a significant risk if staff have a substantial leave liability, and should be proactively managed by schools and MATs – for example, by actively encouraging staff to take leave and maintaining appropriate records.

Making a payment in lieu of accrued untaken holiday in any circumstances other than on termination of employment could be perceived as incentivising staff not to take their holiday and breach the WTR 1998.

Holiday pay

Full-Time Staff (Regular Hours Contracts)

Holiday pay must reflect “normal remuneration”, particularly for the core four weeks of statutory EU-derived leave. This includes basic salary and regular payments such as overtime, allowances and shifts changing, ensuring employees are not financially disadvantaged when taking leave.

Enhanced contractual entitlements must be applied consistently. Part-time and fixed-term staff receive pro-rated leave, and employees continue to accrue both statutory and contractual holiday during sickness absence, maternity or other family related leave.

Irregular Hours Workers and Part Year (Term Time Only) Workers

A worker is an irregular hours worker if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.

Part-year workers, such as term-time only staff, remain under contract but work only part of the year, with unpaid gaps of at least a week.

Prior to April 2024, irregular hour and part year workers holiday pay was calculated using a 52-week reference period, following the Brazel v Harpur Trust litigation which confirmed that workers with variable or part-year working patterns were still entitled to the full 5.6 weeks’ statutory leave, without pro-rating. However, the government overturned this from 1 April 2024.

For leave years beginning on or after 1 April 2024, irregular hour and part year workers both accrue holiday at 12.07% of hours worked. Schools and MATS may continue to pay holiday when leave is taken (using average pay), or adopt “rolled-up” holiday pay, where an uplift is added to each payslip and the worker is then deemed to take any accrued holiday during periods when they are not working, at the end of an assignment, or during periods of school closure, depending on what is stated in their contract. If rolled-up pay is used, it must be clearly itemised and calculated on total earnings. Schools and MATs should ensure clear processes and communication, particularly where working patterns fluctuate significantly.

Multiple employment contracts

Schools and MATs should note that where a worker is engaged under separate contracts—for example, a permanent term-time role and a separate casual contract—each contract is treated as a separate engagement for the purposes of the WTR 1998. This means that statutory holiday entitlement (or more generous contractual entitlement depending on whether they are engaged on Green Book terms and conditions) accrues separately under each contract, and one cannot be offset by holiday received under the other.

Failure to pay holiday pay

If holiday pay is not made, an employee may bring a claim for holiday pay or unlawful deductions from wages. These claims must generally be issued within three months of the deduction or, where there has been a series of deductions, within three months of the last deduction in that series (note the time limits for employment tribunal claims will be increasing to 6 months from 1 October 2026 under the ERA 2025). There is also a two-year backstop on recovery for unlawful deduction claims, meaning any backpay is limited to the two years preceding the claim.

Alternatively, an employee can pursue a civil claim for breach of contract in the county court (including via Money Claim Online). This route has a longer limitation period of six years from the date of breach, meaning it may allow recovery beyond the two-year backstop applicable to unlawful deduction claims.

New employer obligations regarding holiday pay and record keeping – ERA 2025

Prior to ERA 2025, the main risk regarding disputes about holiday pay was that of a claim whether for unlawful deductions from wages or breach of contract.

The changes made under ERA 2025, which came into force on 6 April 2026, introduce a significant new compliance obligation requiring Schools and MATs to keep adequate records that clearly demonstrate each worker’s:

• holiday taken
• holiday carried over from previous years
• holiday pay
• any payments made in lieu of untaken leave.

For holiday pay, employers must give details of what is included in the calculation, for example bonuses, commission or regular overtime.

Records must be kept for a period of six years.

Although there is no prescribed format, School and MATs must ensure that their records are sufficiently detailed to evidence compliance with the WTR 1998 and the above requirements. Therefore, in theory, a simple spreadsheet maintained by each school should suffice, or you may instruct your payroll to maintain the records on your behalf.

This change is important for schools and MATs, many of which have historically operated fragmented or informal systems for tracking holiday, particularly for variable hours or term-time staff. The new requirement formalises record-keeping as a legal obligation, rather than simply a matter of good practice.

Enforcement responsibilities currently sit with HMRC, and are expected to transfer to the Fair Work Agency from 2027. Enforcement involves auditing Schools and MATs and investigating non‑compliance as its enforcement powers are fully implemented.

If an employer cannot prove they have holiday records, it could be a criminal offence. The maximum penalty is likely to be unlimited fines. Other enforcement action might include demands for underpayments of holiday pay and additional financial penalties.

Further resources

Schools and MATs should be familiar with relevant guidance and amendments to the Green Book regarding holiday entitlement and pay. Additional resources can be accessed below:

• Acas – https://www.acas.org.uk/checking-holiday-entitlement
• uk – https://www.gov.uk/holiday-entitlement-rights
• Department for Business & Trade – https://www.gov.uk/government/publications/simplifying-holiday-entitlement-and-holiday-pay-calculations/holiday-pay-and-entitlement-reforms-from-1-january-2024
• Updated Green Book Part 4.12 Term Time Only Employees – https://www.local.gov.uk/sites/default/files/documents/workforce%20-%20Circ%20NJC%20Part%204.12%20TTO%20updated%2013%20March%202024.pdf

What Schools and MATS Should Do Now?

In light of the current legal framework and the recent reforms under ERA 2025, schools and MATs should take proactive steps to ensure compliance and manage risk.

1. Schools and MATs should begin by auditing their workforce to identify the different categories of staff, including full-time employees, irregular hours workers (including casual workers and peripatetic teachers), term-time only staff and individuals engaged under multiple contracts. This exercise is essential in determining whether the correct holiday entitlement and calculation methods are being applied to each group, and whether there is any historic non-compliance that needs to be remedied.
2. It is advisable to review how holiday entitlement and pay are currently calculated, particularly for irregular hours and part-year (term time only) workers. Schools and MATs should ensure that the 12.07% accrual method introduced from 1 April 2024 is being applied correctly where appropriate, and that any use of rolled-up holiday pay is clearly documented and transparently implemented. The provisions of the amended Green Book which includes methods of calculating entitlement and pay should be followed where staff are engaged on Green Book terms and conditions of employment.
3. Employment contracts should be reviewed and updated to reflect current legal requirements. In particular, contracts for casual and term-time only staff should clearly define whether hours are variable and set out the method for calculating and paying holiday entitlement. The holiday year should be clearly defined either under contract or policy. Where rolled-up holiday pay is used, this must be explicitly stated, along with any requirement that holiday is deemed taken during periods when the worker is not working or at an end of an assignment.
4. A key priority is the implementation of robust record-keeping systems to comply with the new statutory duty under ERA 2025. Schools and MATs should ensure that they have systems in place, whether through HR software or structured spreadsheets, to track each worker’s holiday entitlement, leave taken, carry-over and holiday pay calculations. These records should be maintained for at least six years and be readily accessible in the event of an audit. Your auditors may well now want to see evidence that you are complying with the new record keeping requirements under ERA 2025 as part of your general audit.
5. Schools and MATs should actively encourage staff to take their annual leave and keep a record of such communications. This is important in preventing entitlement from carrying forward indefinitely where workers are not given a reasonable opportunity to take their leave.
6. Payroll practices should be reviewed to ensure that holiday pay reflects “normal remuneration” where required. Given the complexity and evolving nature of the law in this area, many academy trusts may wish to undertake a detailed internal audit to identify and address any potential underpayments before they are subject to external enforcement.

Conclusion

Holiday entitlement and pay are complex matters, particularly in a school setting where workers are engaged on various different contracts, national agreements and working patterns. Holiday pay depends on individual circumstances in each case. If you require advice on specific queries about holiday pay affecting your school or trust, please contact the Schools HR team on schoolshr@wslaw.co.uk.

This briefing is not intended to be a definitive statement of the law and is correct at the time of publication. It should not be taken as a substitute for professional legal advice. It does not represent the views of Winckworth Sherwood or any of the authors.