EAT looks at how to calculate the rate of pay for a day’s holiday

In East Lancashire NHS Trust v Akram [2025] EAT 2, the EAT followed the approach set out by the Supreme Court in Chief Constable of the Police Service of Northern Ireland v Agnew [2024] IRLR 56 on how to calculate a day’s pay for holiday pay purposes. It explained that:

• a person should receive no less when on holiday than they would receive when working;

• the employment tribunal must, in accordance with the Working Time Regulations 1998, SI 1998/1833, calculate the correct weekly pay;

• it is after this calculation is made that the tribunal is then in a position to calculate daily or hourly pay by reference to the actual wages that would be earned in the relevant period worked;

• the multiplicand (ie the rate) and the multiplier (ie the time period) can be flexible; it is the relationship between the two that counts because both play a part in the calculation;

• to work out a daily rate of pay could involve using a daily divisor of 365, 240, or some other figure;

• the employer could choose instead to use an annual hourly divisor;

• whatever figure is chosen does not matter until the multiplicand is also chosen.

The EAT also provided a worked example based on a worker that worked four days each week. It explained that if the employer decided to divide the weekly pay by the seven calendar days rather than the four working days then, in order for the worker to be paid the correct amount, they would have to be paid for both days they would have worked in the week as well as days that they would not have worked.

While the EAT’s decision does not dictate the use of working days only, the worked example does illustrate why this is likely to be much easier for an employer to apply in practice.

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