Understanding bank holiday employment law in the UK

The UK has a lot of love for bank holidays. But from a payroll perspective, they can be tricky to deal with. There are also plenty of questions to consider as an employer.

What if an additional bank holiday is granted, for example to celebrate the recent King’s coronation? Should staff receive extra pay for working on bank holidays? Can employees legally refuse to work on a bank holiday? And what’s the deal with employment law, bank holidays and part-time workers?

In this guide, we’ll break down everything to do with bank holiday employment law, and answer some of the questions that HR teams and business leaders will be posing themselves around these rules and bank holidays.

What’s the difference between a public holiday and a bank holiday?  

A bank holiday is a national public holiday that’s observed across the UK. The name ‘bank’ comes from the fact that banks have traditionally always closed on these days, along with many other businesses. Public holidays, on the other hand, mark traditional cultural events such as Christmas in December, or Easter Monday, which can fall in March or April.

In the eyes of UK employment law, bank holidays and public holidays are essentially the same thing. That’s because there’s no real material difference between these two terms - businesses are closed in either scenario. So, for the purposes of this post, ‘bank holidays’ refers to both bank and public holidays (and any guidance applies to both).

What is the annual bank holiday entitlement for employees?

The Working Time Regulations Act of 1998 stipulates that employees are entitled to 5.6 weeks of paid annual leave (pro-rata if they’re part-time). That’s around 28 days a year, which can include, for example, the summer holidays in August.

Holiday entitlement is a whole subject unto itself. In this post, we’ll rather focus on how bank holidays factor into this. And the answer to this is that when it comes to including bank holidays as part of holiday entitlement, companies have a few options.

One of these is to include bank holidays with the statutory entitlement, so as part of their 28 days, employees would also get bank holidays off. Alternatively, you could give your employees bank holidays off on top of the statutory entitlement. So, for instance, you could give them 36 days of holiday in total (28 + 8 additional bank holiday days).

It’s worth noting that bank holidays do differ between England, Scotland, Wales and Northern Ireland, so if you have personnel based in these areas, you should ensure their contracts reflect this.

Can an employee refuse to work on a bank holiday?

When it comes to the law regarding bank holidays, there is no legal requirement for personnel to take time off on a bank holiday. Whether they can take the day off or not depends on their employment contract.

This is something that often surprises personnel and employers alike. After all, isn’t the whole point of a bank holiday to have time off to make the most of that famous UK long weekend culture (or simply sit at home and eat a whole plate of mince pies)? However, this isn’t the case — employers are, in fact, free to set their own rules for bank holiday shifts. 

Given this, some businesses might choose to continue operating on a bank holiday, which can be very useful for, say, retailers at Christmas, or for New Year’s Day in January. It all comes down to what’s worded in your employee contracts, as well as your annual leave policy.

What should be included in contracts and policies?

One thing is clear: The rules regarding how you deal with bank holidays as a business should be clearly stated in your annual leave policy as well as your employee contracts. These documents should clarify the following:

• Whether staff get paid leave for any bank holidays

• Whether minimum holiday entitlement includes or excludes bank holidays

• Whether staff can work on a bank holiday in return for a different day (this is known as an alternate day, or a day in lieu)

• Whether enhanced pay is given to staff members working on bank holidays

If an employee does work on a bank holiday, and their contracts stipulate they need to take a ‘day in lieu’, you’ll need to encourage them to take a day off later on. This is because every worker is entitled to a minimum of 5.6 weeks of annual leave entitlement (pro-rated if they’re part-time). And no, paying double for a bank holiday worked does not take the place of this day off in lieu.

What about part-time workers?

When it comes to UK employment law and bank holidays, part-time personnel shouldn’t be treated less favourably than their full-time colleagues. As long as they work regular part-time schedules, you’ll need to provide them with pro-rata bank holidays based on the full-time entitlement. 

However, part-time workers with irregular hours (on an ongoing contract basis) are entitled to the full 5.6 weeks of annual leave, not a prorated amount, as deemed by the Supreme Court in Harpur Trust vs. Brazel.

How is the entitlement calculated for part-time workers?

The pro-rata calculation for part-time workers remains crucial in 2026. To help you, here’s the updated approach:

• Calculate the proportion of full-time hours worked

• Apply this proportion to the full-time bank holiday entitlement

• Account for any bank holidays that naturally fall on their working days

• Consider any premium payments for bank holiday shifts in line with current rates

What happens if an additional bank holiday is granted?

It’s rare, but it can happen. Usually, employees will rejoice at the news of getting an extra bank holiday in the year, though sometimes these are added to mark a more sombre occasion (such as the death of a monarch).

In fact, in 2022, we saw two additional bank holidays added for:

• the Platinum Jubilee

• the funeral of Her Majesty Queen Elizabeth II

And, in 2023, we received yet another additional bank holiday to mark the coronation of King Charles III.

So, what does the law on bank holidays say in these situations, and how should you factor any upcoming holiday into employee entitlement? The answer is always go back and look at their employment contracts. These, above anything else, should dictate how you treat any bank holiday, whatever the date or occasion.

What are the changes to bank holiday entitlement in 2026?

The landscape of bank holiday entitlement continues to evolve with the continued rise of flexible working arrangements. In 2026, employers need to be particularly mindful of:

• The introduction of more flexible working patterns and their impact on bank holiday calculations

• Changes to holiday pay calculations for irregular hours workers

• New guidelines for managing bank holidays within compressed working weeks

How do flexible working arrangements affect bank holidays?

With the expansion of flexible working rights in 2025, employers must ensure fair treatment regarding bank holidays for employees with different working patterns:

• Compressed hours workers should receive equivalent bank holiday entitlement to traditional workers

• Hybrid workers may have different arrangements depending on whether bank holidays fall on their office or remote days

• The employer should clearly document how bank holidays are handled in flexible working agreements

Payroll software you can bank on

With PayFit, bank holiday employment law is one less thing you’ll need to concern yourself with. 

Never worry about mistreating bank holidays through payroll ever again, with payroll software that’s coded to automatically include a new bank holiday whenever it arises, so you can sit back and relax. Plus, our best-in-class payroll technology means you can automate up to 90% of your payroll tasks.

And better still? PayFit works in harmony with leading HR and accounting platforms, so you can sync bank holidays with your payroll for instant updates — perfect for part-time and casual workers.

Find out why over 10,000 businesses trust PayFit on a monthly basis to run their payroll.

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