Annual leave and bank holiday pay for GP practice staff has become one of the most legally complex areas of employment law for practice managers and GP partners to navigate in 2026. The holiday pay reforms introduced by the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 — which came into full effect for leave years beginning on or after 1 April 2024 — have fundamentally changed how holiday pay must be calculated for workers with irregular or variable hours. For GP practices, which routinely employ part-time receptionists, bank healthcare assistants, sessional nurses, and clinical staff on varied contracts, getting this right is both legally mandatory and financially material.
On top of the 2023 reforms, April 2026 has brought further changes to the practical administration of holiday pay through the National Living Wage increase, the employer NIC changes, and the DDRB pay award — all of which interact with holiday pay calculations in ways that practice managers need to understand. HMRC and Employment Tribunal claims related to holiday pay underpayment have been rising steadily since 2020, and GP practices — as employers — are not exempt from this risk.
This guide explains what the law requires for annual leave and bank holiday pay for GP practice staff in 2026, how to calculate holiday pay correctly for different worker types, what has changed recently, and the specific steps practice managers and GP partners need to take to ensure compliance and avoid the growing risk of Employment Tribunal claims.
The Statutory Entitlement: What Every GP Practice Employee Is Entitled To
The starting point is the Working Time Regulations 1998, which give every worker — not just employees — a minimum statutory entitlement to paid annual leave. In 2026 the entitlements are as follows.
Full Statutory Entitlement: 5.6 Weeks Per Year
Every worker is entitled to a minimum of 5.6 weeks of paid annual leave per year. For a full-time worker working five days per week, this is 28 days per year — the equivalent of 5.6 weeks. This 28-day figure includes bank holidays, which means a full-time GP practice employee is entitled to 28 days of paid leave per year and the practice can include bank holidays within this entitlement rather than granting them in addition.
However, many GP practices — particularly those following NHS terms and conditions — grant leave entitlements above the statutory minimum. Under the NHS Agenda for Change pay framework, the standard leave entitlement starts at 27 days per year plus 8 bank holidays (35 days in total) for new starters and rises to 33 days plus 8 bank holidays (41 days in total) after 10 years of NHS service. GP practices that employ staff on Agenda for Change terms are contractually obliged to honour these higher entitlements even though they exceed the statutory minimum.
The Critical Distinction: Statutory Leave vs Contractual Leave
For holiday pay purposes, the law treats the first 4 weeks of statutory leave (derived from the EU Working Time Directive) and the additional 1.6 weeks of UK statutory leave differently. This distinction matters for how overtime and other variable payments are treated in the holiday pay calculation — covered in detail below. Any additional contractual leave above the 5.6 weeks statutory minimum can be paid at a different rate if the employment contract specifies this — though most practices simply pay all leave at the same rate for simplicity.
Part-Time Workers: Pro-Rata Entitlement
Part-time workers are entitled to the same proportion of the 5.6 weeks entitlement as their working pattern bears to full time. A receptionist working three days per week is entitled to 5.6 × 3 = 16.8 days of paid leave per year. A healthcare assistant working 20 hours per week across variable days is entitled to 5.6 weeks of their normal working week — but because their days and hours vary, the calculation becomes more complex, as explained below.
Key Point: Every worker in your GP practice — regardless of their contract type, hours, or funding source — has a statutory right to paid annual leave under the Working Time Regulations. This includes bank workers paid on a sessional basis, workers on zero-hours contracts, and ARRS-funded clinical staff employed by the practice. There is no exemption for healthcare workers, no exemption for small practices, and no exemption based on funding source. Non-compliance is an Employment Tribunal risk that has resulted in substantial back-pay awards against employers across the healthcare sector.
The 2023 Holiday Pay Reforms: What Changed and Why It Matters for GP Practices
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 introduced two changes that directly affect GP practices with variable-hours workers — and which have been in full effect since April 2024.
Change 1: The Rolled-Up Holiday Pay Option Returns for Irregular Hours Workers
For workers with irregular or part-year working patterns — zero-hours workers, bank workers, sessional staff, and workers whose hours vary significantly week to week — employers now have the option to pay holiday pay on a rolled-up basis. Rolled-up holiday pay means adding a holiday pay supplement of 12.71% to every payment made to the worker, rather than requiring the worker to take leave and be paid at that time.
The 12.71% figure is derived from the proportion that 5.6 weeks of leave bears to the remaining 44.0 working weeks in a year when based on a standard 52-week working year: 5.6 ÷ 44.0 = 12.71%.
For a GP practice with bank healthcare assistants or sessional workers who do not have a regular pattern of work, rolled-up holiday pay provides a straightforward alternative to the complex process of calculating normal remuneration for each leave period. The rolled-up supplement must be shown separately on the payslip and must be genuinely additional to the worker’s basic rate — it cannot be included within the headline hourly rate without being itemised.
Change 2: The Reference Period for Calculating Holiday Pay
For workers with variable pay — including overtime, allowances, and other payments — the reference period for calculating the average weekly pay to be used for holiday pay purposes has been maintained at 52 weeks under the Employment Rights Act 1996 amendment. The calculation uses the worker’s average weekly remuneration over the 52 weeks immediately before the leave period, excluding any weeks in which no remuneration was received.
This means that for a GP practice receptionist whose hours or pay vary — for example, because they regularly work additional shifts or receive overtime — their holiday pay must be based on their average weekly earnings over 52 weeks, not simply their contracted hours multiplied by their basic hourly rate.
Warning: Many GP practices are still calculating holiday pay for variable-hours workers using their contracted hours and basic rate only — ignoring the 52-week average requirement. This is a systematic underpayment of holiday pay that creates a retrospective liability. Employment Tribunal claims for holiday pay underpayment can go back two years under the Deduction from Wages rules, meaning a practice that has been underpaying for two years faces a back-pay liability for the full period. If your payroll has not been updated to reflect the 52-week average requirement, this needs to be addressed immediately.
Which Payments Must Be Included in Holiday Pay Calculations?
This is the area where GP practices most frequently get holiday pay wrong — and where the Employment Tribunal case law has evolved most significantly since the Bear Scotland v Fulton judgment in 2014 and subsequent cases.
The Principle: Normal Remuneration
Holiday pay for the first four weeks of statutory leave must reflect the worker’s normal remuneration — not just their basic contractual pay. HMRC and Employment Tribunals have consistently held that holiday pay calculated only on basic salary, where a worker regularly receives additional payments, is an unlawful deduction from wages.
Payments That Must Be Included
For GP practice staff, the following payments must be included in the holiday pay calculation where they are paid regularly:
Overtime — both guaranteed and non-guaranteed. A receptionist who regularly works additional hours beyond their contracted hours — even if those additional hours are not guaranteed by the contract — must have those earnings included in the 52-week average used for holiday pay. This is the most commonly missed element in GP practice payroll.
Allowances that are intrinsic to the role. If a practice nurse regularly receives an allowance for performing an extended role — for example, a clinical lead allowance or a prescribing allowance — and this is received in most weeks, it forms part of normal remuneration and must be included.
Shift premium payments. A healthcare assistant who regularly works evening or weekend shifts and receives a shift premium for doing so must have that premium included in the holiday pay calculation. The premium reflects their normal working pattern and cannot be excluded simply because it is variable.
On-call and standby payments. Where practice staff receive regular on-call or standby payments as part of their working arrangements, these must be included in the calculation of normal remuneration.
Payments That Can Be Excluded
Genuinely irregular or one-off overtime payments — where there is no regular pattern and the overtime occurs only occasionally — can be excluded. Expenses and expense reimbursements are excluded. Genuine discretionary bonuses with no contractual basis can be excluded. Loans, advances, or one-off payments of a capital nature are excluded.
The Practical Implication for GP Practices
A practice receptionist on a 25-hour per week contract who regularly works an extra four to five hours per week to cover busy periods has normal remuneration that includes those additional hours. If the practice calculates holiday pay at 25 contracted hours per week and ignores the regular overtime, it is underpaying. The correct calculation uses the 52-week average of total weekly earnings — including the regular overtime — as the basis for holiday pay.
For a receptionist earning £13.50 per hour who regularly works 30 hours per week rather than the contracted 25, the correct weekly holiday pay rate is 30 × £13.50 = £405 per week, not 25 × £13.50 = £337.50. The difference of £67.50 per week of leave taken represents a systematic underpayment that accumulates into a material liability over time.
Bank Holidays: The Specific Rules for GP Practice Staff
Bank holiday entitlement is an area of particular complexity for GP practices, which by their nature often need to provide some level of service on bank holidays or have staff working unusual patterns that interact with bank holiday calculations in complex ways.
The Statutory Position
There is no automatic statutory right to bank holidays as additional paid leave. The statutory 5.6 weeks entitlement includes bank holidays — a practice can count bank holidays within the 5.6 weeks rather than granting them on top. Whether bank holidays are included within or are additional to the 5.6 weeks statutory entitlement depends entirely on what the employment contract says.
The NHS Agenda for Change Position
Under NHS Agenda for Change terms — which many GP practice staff are employed on, particularly in practices that have chosen to adopt NHS terms — the 8 public holidays in England are granted as paid leave in addition to the annual leave entitlement. A Band 3 receptionist in their first five years of NHS service is therefore entitled to 27 days of annual leave plus 8 bank holidays — a total of 35 days. This exceeds the 28-day statutory minimum.
Part-Time Workers and Bank Holiday Entitlement
Part-time workers have the right to bank holiday leave on a pro-rata basis — they cannot be treated less favourably than equivalent full-time workers simply because they work part time. However, the practical calculation depends on whether the part-time worker actually works on the day on which a bank holiday falls.
A part-time receptionist who never works Mondays — when many bank holidays fall — should not automatically receive eight bank holidays pro-rated and converted to leave days. Instead, the practice should calculate their bank holiday entitlement by reference to the proportion of bank holidays that fall on days when they would normally work. This is a calculation that many GP practice payroll systems do not perform correctly.
The Correct Approach for Part-Time Bank Holiday Calculation
For a part-time worker whose days vary or who does not work on traditional bank holiday days, the correct approach is to calculate their total leave entitlement (annual leave plus bank holidays if applicable) and convert the whole entitlement to hours rather than days — then allow the worker to take that total entitlement in hours at their discretion, with each hour of leave taken deducted from the total. This avoids the complexity of trying to identify which specific bank holidays the worker would or would not work.
Our payroll for healthcare team implements this hours-based approach for GP practice clients with complex part-time and variable hours workforces — it is the most practical and legally compliant method for practices where shift patterns do not align neatly with the traditional Monday bank holiday pattern.
Zero-Hours and Bank Workers in GP Practices: The Holiday Pay Calculation
Zero-hours workers and bank workers in GP practices have full holiday pay rights under the Working Time Regulations — the type of contract does not diminish the entitlement. However, the calculation of their holiday pay is different from permanent employees.
Using Rolled-Up Holiday Pay
Following the 2023 reforms, the simplest compliant approach for zero-hours and bank workers in GP practices is rolled-up holiday pay at 12.71% of gross earnings, shown separately on each payslip. This is appropriate where the worker genuinely has irregular hours and an unpredictable working pattern — which describes most bank healthcare assistants and sessional workers in GP practices.
The 12.71% must be calculated on total gross earnings including any regular overtime or allowances, and must be paid as a genuine addition to the worker’s hourly rate. If your zero-hours workers are currently paid a single hourly rate with no separate holiday pay supplement, they are not receiving their statutory holiday pay and the practice has a growing liability.
Using the 52-Week Reference Period
Where a zero-hours or bank worker has a sufficiently regular pattern of working — for example, they work most weeks even if not in contracted hours — the alternative is to calculate their holiday pay using the 52-week average reference period when they take leave. This approach is more administratively complex but avoids the need to pay the rolled-up supplement on every payment.
Most GP practices with significant numbers of bank or sessional workers find the rolled-up approach more practical — but it requires the payroll system to correctly calculate and separately identify the 12.71% supplement on every payment run.
The April 2026 Interactions: NLW, NIC, and DDRB
The April 2026 changes to the National Living Wage, employer NIC rates, and the DDRB pay award all interact with holiday pay obligations in ways that GP practices need to understand.
National Living Wage Increase and Holiday Pay
The NLW increase to £12.21 per hour from 1 April 2026 means that the hourly rate underpinning holiday pay calculations for NLW-rate workers has increased. A bank healthcare assistant previously earning £11.44 per hour and receiving rolled-up holiday pay at 12.71% was receiving £11.44 + (£11.44 × 12.71%) = £12.89 per hour in total. At the new NLW of £12.21 per hour, the total including rolled-up holiday pay becomes £12.21 + (£12.21 × 12.71%) = £13.76 per hour. Ensure your payroll system has updated the base NLW rate and is recalculating the rolled-up supplement on the new rate from April 2026.
Employer NIC on Holiday Pay
Holiday pay — whether paid when leave is taken or rolled up into each payment — is subject to employer NIC at the new 15% rate from April 2026. The NIC is calculated on the total gross payment including any rolled-up holiday supplement. This means the employer NIC cost of employing bank workers with rolled-up holiday pay is calculated on the higher gross figure (basic rate plus 12.71% supplement), not just the basic rate. Factor this into your employment cost calculations for bank and sessional staff.
DDRB Pay Award and Holiday Pay
For practice nurses, nurse practitioners, and clinical pharmacists employed by the GP practice on NHS pay scales, the DDRB 3.5% pay award from 1 April 2026 increases their basic salary — which in turn increases their holiday pay. A practice nurse previously earning £38,000 per year who receives a 3.5% pay award to £39,330 will have their holiday pay calculated on the higher salary from April 2026. If holiday pay is calculated as a daily or weekly rate derived from annual salary, ensure the payroll system is using the updated post-award salary as the basis for holiday pay from April 2026. As covered in our DDRB pay award guide, the pay award must be implemented from 1 April — which means holiday pay at the new rate applies to any leave taken on or after that date.
Common Holiday Pay Mistakes in GP Practices: The Compliance Checklist
Based on the most frequent errors identified in GP practice payroll reviews, here is a checklist of the specific holiday pay issues that practice managers should review for 2026.
Calculating holiday pay on basic rate only for workers who regularly receive overtime. As explained above, this is the single most common and most financially significant holiday pay error in GP practices. Review every employee who regularly receives overtime or shift enhancements and confirm that their holiday pay is based on the 52-week average of total earnings, not just basic rate.
Failing to show rolled-up holiday pay separately on payslips. If you pay rolled-up holiday pay to zero-hours or bank workers, it must be separately identified on the payslip — showing a distinct line for holiday pay at 12.71% of gross. If it is buried within the hourly rate without separate identification, the arrangement does not comply with the 2023 regulations and the worker can claim they have not received their holiday pay entitlement.
Applying the wrong leave entitlement to part-time workers. A common error is giving all part-time workers a standard pro-rated number of days rather than converting the entitlement to hours and allowing flexible use. For workers with variable days or those who never work on Mondays, the days-based approach generates incorrect entitlements.
Not including bank holidays correctly for Agenda for Change staff. If your practice employs staff on NHS Agenda for Change terms, their bank holiday entitlement is in addition to their annual leave entitlement — it is not included within it. A Band 4 healthcare assistant with two years of NHS service is entitled to 27 days of annual leave plus 8 bank holidays, not 27 days that includes bank holidays.
Failing to update the 52-week reference period when pay rates change. When a worker receives a pay increase — whether from the NLW increase, the DDRB award, or a standard pay review — the 52-week reference period will gradually update to reflect the higher rate as weeks at the new rate replace weeks at the old rate. However, if a worker takes leave immediately after a pay increase, the most recent weeks at the new rate should be weighted appropriately in the calculation. Ensure your payroll software handles this correctly.
Not maintaining adequate leave records. HMRC and Employment Tribunals require employers to maintain records showing leave taken, holiday pay calculated, and the basis of that calculation. A practice that cannot produce these records in the event of an Employment Tribunal claim is in a significantly weaker position. Records should be retained for at least two years for Employment Tribunal purposes and six years for HMRC compliance.
The Employment Tribunal Risk: What GP Practices Are Exposed To
Employment Tribunal claims for holiday pay underpayment have been increasing year on year since the Bear Scotland v Fulton judgment established that non-guaranteed overtime must be included in holiday pay calculations. Healthcare employers — including GP practices — are not exempt from this risk and have featured in reported cases.
The Deduction from Wages Route
A worker who believes they have been underpaid holiday pay can bring an Employment Tribunal claim as an unlawful deduction from wages under the Employment Rights Act 1996. Claims can go back two years from the date of the most recent underpayment — which means a practice that has been systematically underpaying holiday pay for years faces a two-year retrospective liability.
The Financial Exposure
For a GP practice with ten employees who have each been underpaid holiday pay by an average of £800 per year for two years, the total back-pay liability is approximately £16,000. Add Acas early conciliation costs, potential legal fees, and the management time of dealing with the claim, and the total cost of non-compliance significantly exceeds the cost of getting the payroll right in the first place.
HMRC Risk
HMRC’s National Minimum Wage enforcement team also reviews holiday pay compliance — specifically checking that workers are not receiving below the NMW when their total pay including holiday entitlement is correctly calculated. Where rolled-up holiday pay is not being paid, HMRC can treat this as an NMW underpayment, which carries financial penalties and can result in public naming.
Our payroll for healthcare team carries out holiday pay compliance reviews for GP practices as part of our onboarding process — identifying any systematic underpayment before it becomes an Employment Tribunal risk. If you have not had a holiday pay review in the last 12 months, this should be a priority. Our healthcare accounting team can arrange a payroll compliance review alongside the wider bookkeeping for healthcare health check for your practice.
Practical Steps for GP Practice Managers in 2026
Here are the specific actions every GP practice manager should take to ensure holiday pay compliance in 2026.
Step 1 — Categorise your workforce by contract type. Identify every worker in your practice — salaried employees, part-time employees, bank workers, zero-hours workers, sessional clinical staff — and confirm the correct holiday pay calculation method for each category. Salaried employees with regular hours use the basic rate. Variable-hours workers use the 52-week average. Zero-hours and bank workers use either rolled-up holiday pay at 12.71% or the 52-week average.
Step 2 — Audit your current holiday pay calculations. For each employee category, confirm that the current payroll system is calculating holiday pay using the correct method. If overtime, shift premiums, or other regular additional payments are being excluded from any worker’s holiday pay calculation, this needs to be corrected immediately.
Step 3 — Implement rolled-up holiday pay for all zero-hours and bank workers. Ensure the payroll system is calculating 12.71% of gross earnings as a separately identified holiday pay supplement for all zero-hours and bank workers. Update payslip templates to show this as a distinct line item.
Step 4 — Update all leave calculations for the April 2026 pay changes. Ensure the 52-week reference period used for holiday pay calculations has been updated to reflect the new NLW rate of £12.21 and the DDRB pay award for nursing and clinical staff from April 2026.
Step 5 — Review your Agenda for Change staff leave entitlements. For staff employed on NHS terms, confirm that their leave entitlement correctly reflects their years of NHS service and that bank holidays are granted in addition to annual leave, not included within it.
Step 6 — Convert part-time entitlements to hours. For all part-time workers with variable working patterns or who do not regularly work on Mondays, convert their total leave entitlement (annual leave plus bank holidays if applicable) to hours and implement a system that deducts hours as leave is taken, rather than managing days.
Step 7 — Ensure records are maintained. Implement a leave management system — whether within your payroll software or a separate HR system — that records leave requested, leave approved, leave taken, and holiday pay calculated for each worker. Retain records for a minimum of two years.Our payroll for healthcare specialists work with GP practices to implement all of these steps as part of a payroll compliance review. If you are concerned about your current holiday pay position, contact our team to arrange an immediate review.
Frequently Asked Questions
There is no statutory right to enhanced pay for working on a bank holiday — the obligation is to provide paid leave, not to pay a premium rate for working on the bank holiday itself. Whether you pay an enhanced rate for bank holiday working depends entirely on what your employment contracts say. Many GP practices that follow NHS terms and conditions pay a time and a half or double time rate for bank holiday working — if your contracts specify this, you are contractually obliged to pay it.
If your contracts are silent on the point, the statutory minimum is to provide the bank holiday as paid leave at the worker’s normal rate — not to pay an enhanced rate for working it. Review your employment contracts and staff handbook to confirm what obligation you have made. Our payroll team can review your contracts and confirm what payments are required.
A zero-hours worker employed for three years has three years of accumulated holiday pay entitlement. If they have been working regularly throughout that period, they have been earning holiday entitlement throughout — even if they have never formally taken leave or received holiday pay as a separate payment.
Our healthcare accounting team can help you manage this process.
It depends on whether the additional responsibilities generate additional pay and whether they are performed regularly. If your practice manager regularly works additional hours and receives additional pay for those hours — whether as formal overtime, an allowance, or an enhanced payment — and this has been the pattern for most of the 52 weeks before any leave period, those additional earnings should be included in the 52-week average used to calculate their holiday pay.
If the additional responsibilities are absorbed within their contracted hours and their pay does not vary, the contracted salary is the correct basis for holiday pay. Review the pay records for the last 52 weeks and calculate whether total weekly earnings have been consistently higher than the basic contracted rate. Our payroll for healthcare team can carry out this review for you.
Moving staff away from Agenda for Change terms is a significant change to terms and conditions that requires a formal consultation process and, if staff do not agree, a process of dismissal and re-engagement — which carries significant employment law risk.
On holiday pay specifically, you cannot reduce the holiday entitlement of existing staff below the statutory minimum of 5.6 weeks without their consent — and you cannot reduce it to below the level they were previously entitled to without their consent, as this would be a detriment to their terms.
Before taking any steps to change terms and conditions, seek employment law advice alongside the financial advice from your GP practice accountant. The financial savings from changing terms need to be weighed against the legal risk and the impact on staff retention and morale.
Respond promptly and engage proactively with the HMRC compliance check. HMRC’s minimum wage enforcement team reviews holiday pay compliance as part of their NMW checks — they will want to see evidence that holiday pay is being correctly calculated and paid for all workers, including zero-hours and bank workers.
Gather your payroll records, holiday pay calculation methodology, and payslips for the period under review. If you identify any underpayments in the process of gathering this information, it is better to disclose and correct them proactively than to have HMRC identify them — proactive disclosure typically results in lower penalties.
Our payroll for healthcare team can help you prepare the response to the HMRC compliance check and manage any voluntary disclosure process. Contact us immediately if you have received an HMRC compliance check letter.
Summary: Holiday Pay Compliance Is Not Optional for GP Practices
Annual leave and bank holiday pay compliance in 2026 is more technically demanding than it has ever been for GP practices. The 2023 reforms, the 52-week reference period requirement, the rolled-up holiday pay option at 12.71% for irregular hours workers, and the April 2026 changes to NLW, NIC, and pay awards all combine to create a compliance environment where getting every element right requires specialist payroll knowledge and up-to-date systems.
The immediate actions are clear:
- Audit your holiday pay calculations across all worker categories — salaried, part-time, bank, and zero-hours
- Implement rolled-up holiday pay at 12.71% for all zero-hours and bank workers with separately identified payslip lines
- Review Agenda for Change entitlements for NHS-terms staff — bank holidays must be in addition to annual leave, not within it
- Update all calculations for the April 2026 NLW (£12.21/hr), DDRB pay award, and NIC changes
- Maintain proper leave records — retained for at least two years for Employment Tribunal and six years for HMRC
- Work with a specialist healthcare payroll provider who understands GP practice employment complexities
If you would like a holiday pay compliance review for your GP practice — or a broader payroll health check covering all April 2026 changes — contact our team for an immediate consultation.
You may also find these related guides useful: employer NIC changes April 2026 · DDRB pay award 2026 · GP contract 2026/27 · IR35 and healthcare workers · payroll for healthcare.