People Group Services Limited Company Number: 11570329

Holiday Pay Calculation & Accrual Policy

Purpose

This policy sets out how holiday entitlement is accrued, calculated, and paid for workers engaged through People Group Services Ltd (“PGS”).

It ensures compliance with:

• The Working Time Regulations 1998 (as amended)
• Relevant case law including Bear Scotland Ltd v Fulton, Lock v British Gas, and Harpur Trust v Brazel
• HMRC guidance on holiday pay within PAYE employment models

This policy also supports PGS’s commitment to full transparency and accurate, compliant payroll processing.

Scope

This policy applies to:

• All workers employed and paid via PGS under PAYE arrangements
• Including:
  • Temporary workers
  • Agency workers
  • Variable hours workers
  • Zero-hours or assignment-based workers

Holiday Entitlement

Statutory Entitlement

Workers are entitled to:

• 5.6 weeks’ paid annual leave per leave year

This is typically:

• 28 days per annum for a full-time worker (based on 5 days per week)

Pro-Rata Entitlement

For workers with irregular or part-time hours:

• Holiday entitlement is calculated on a pro-rata basis in line with hours worked

Holiday Accrual Method

Accrual Rate

Holiday entitlement is accrued at:

12.07% of hours worked

This is derived from:

• 5.6 weeks ÷ 46.4 working weeks = 12.07%

Accrual Application

Holiday accrual:

• Builds up in real time based on hours worked
• Is recorded and visible via payslips and/or the PGS portal
• Is calculated to the penny, in line with PGS payroll standards

5. Holiday Pay Calculation

Standard Calculation (Variable Pay Workers)

Holiday pay is calculated using:

• Average weekly earnings over the previous 52 paid weeks

In accordance with legislation:

• Only weeks in which pay was received are included
• Up to 104 weeks may be referenced to identify 52 paid weeks

Included Payments

Holiday pay includes:

• Basic pay
• Regular overtime (if applicable)
• Commission (if applicable)
• Allowances intrinsically linked to the role

Excluded Payments

Holiday pay excludes:

• Genuine expenses
• One-off discretionary bonuses
• Reimbursements

Methods of Holiday Pay Payment

PGS may operate one of the following methods, depending on assignment structure and contractual agreement:

Accrued Holiday Pay (Preferred Method)

• Holiday pay is accrued and held as a separate balance
• Paid when:
  • Holiday is requested and approved; or
  • Upon termination of employment (unused entitlement)

Benefits:

• Fully compliant with UK case law
• Ensures workers receive pay when leave is taken

Rolled-Up Holiday Pay (Where Applicable)

Where contractually agreed and legally compliant:

• Holiday pay is paid alongside regular earnings
• Clearly itemised on payslips
• Calculated at 12.07% uplift

Important:

• Workers must still be encouraged to take leave
• PGS ensures full transparency of this payment structure

Taking Annual Leave

Booking Leave

Workers must:

• Request leave in advance via the agreed process
• Obtain approval before taking leave

Notice Requirements

• Notice must be at least twice the length of the leave requested, unless otherwise agreed

Payment During Leave

When leave is taken:

• Payment is made at the correct average rate of pay
• Payment aligns with:
  • The worker’s normal pay cycle
  • The statutory calculation method

Carry Over of Leave

In line with legislation:

Workers may carry forward leave where:

• They were unable to take leave due to:
  • Sickness
  • Maternity or family leave
  • Employer restriction

Otherwise:

• Holiday should be taken within the leave year

Termination of Employment

Upon termination:

• Any accrued but untaken holiday will be paid
• If excess holiday has been taken:
  • A deduction may be made from final pay (where contractually permitted)

Transparency & Audit

In line with PGS’s compliance-first approach:

• All holiday accrual and payments are:
  • Clearly itemised on payslips
  • Available for review via the PGS portal
• Calculations are:
  • Fully auditable
  • Aligned with HMRC and statutory requirements

Compliance Statement

People Group Services Ltd operates a zero-compromise compliance model, ensuring that:

• Holiday pay is calculated accurately and fairly
• All processes align with:
  • UK employment law
  • HMRC expectations
  • Industry best practice

Policy Review

This policy will be:

• Reviewed annually; or
• Updated in line with:
  • Legislative changes
  • Case law developments
  • HMRC guidance updates

Contact

For any queries regarding holiday entitlement or pay:

People Group Services Ltd
Compliance & Payroll Team
compliance@peoplegroupservices.com

Declaration

This Policy is approved by the Board of Directors of: People Group Services Limited Company Number: 11570329

Last updated: 24th March 2026