Author Sharon Gallagher, Sales Director
Don’t get caught out.
One provider paid the price when employees took action against them, resulting in £30k of backpay and a substantial accountancy bill. The costly mistake was only resolved by switching to software designed specifically for care homes.
The updated ACAS guidance reinforces the principle that employees should receive “normal pay” when taking annual leave. This means that where overtime is worked regularly and forms part of an employee’s normal earnings, it should be reflected in holiday pay calculations.
The guidance applies not only to guaranteed overtime, but also to non-guaranteed and, in many cases, voluntary overtime, where it is worked consistently over time.
As a service, you need to review your payroll practices against these requirements and confirm that holiday pay calculations now appropriately take account of regular overtime payments where applicable. This ensures employees taking annual leave are not financially disadvantaged compared with periods when they are actively working.
The updated approach includes:
- Inclusion of regular overtime payments within holiday pay calculations
- Use of the recommended 52-week averaging reference period where applicable
- Alignment of payroll procedures with current ACAS guidance and Working Time Regulations
- Ongoing monitoring of employment law and payroll compliance requirements
- Regular review of payroll and HR processes to maintain accuracy and fairness
Under the ACAS guidance, employers are expected to assess whether overtime forms part of an employee’s normal remuneration.
This includes situations where employees regularly work additional hours, take on weekend shifts, or consistently receive overtime payments over an extended period.
Are your software payroll procedures aligned with this approach? Regular overtime earnings are now considered as part of the holiday pay calculation process using the relevant averaging period where required. This provides greater consistency, transparency, and fairness for employees across the organisation.
Why this is important to the care sector
If any sector feels the weight of this guidance, it is care.
Few industries run on the kind of flexible, fluctuating, around-the-clock effort that defines a care home, a supported living service, or a domiciliary round.
Vacancies, sickness, last-minute cancellations, and the unpredictability of humans mean that overtime in care is not the exception.
Staff stepping in to cover a colleague’s shift, picking up an extra waking night, or extending a round to settle a service user are doing what the sector has always relied on them to do.
The question now is whether the way they are paid for the holidays they so take honestly reflects the hours they so regularly work.
For many providers, the answer is uncomfortable.
Holiday pay has traditionally been pegged to a basic contracted rate, which works neatly on paper but rarely matches the lived experience of a carer whose payslip looks meaningfully larger most months because of the extras they consistently absorb.
When that same carer takes a week of annual leave and sees a noticeably smaller payment, the system has, quietly, penalised them for resting.
ACAS is not introducing a new philosophy; instead they are making it harder to overlook.
What “regular overtime” looks like on a care rota.
The phrase “regular overtime” can sound abstract until you hold it up against a real rota.
Consider the senior carer in a residential home who picks up additional shifts twice a week because the service is short-staffed.
And what about a support worker in a supported living setting who reliably volunteers for the Saturday late shift because the rota needs covering and the enhancement helps with the bills.
None of these arrangements are formally guaranteed. All of them, sustained over months, sit comfortably within the kind of pattern that ACAS now expects employers to recognise as part of normal remuneration.
The same logic extends to the layered payments so characteristic of care work.
Bank holiday enhancements, weekend and night shift uplifts, sleep-in allowances, depending on how regularly they appear, form part of an employee’s normal earnings.
The test is not whether the payment is labelled “overtime” or “allowance” but whether it appears consistently enough to be a fair representation of what that worker typically takes home. In care, where these layers are the norm rather than the exception, applying that test honestly tends to reveal more inclusions than exclusions.
The 52-week reference period in practice
The 52-week averaging method was designed precisely for workforces like ours.
A worker whose hours and shifts vary across the year is poorly served by a single representative week, and the longer reference period gives a far truer picture of their normal earnings. In practice, payroll teams need to look back across each qualifying paid week, exclude weeks without pay, and reach back further where necessary to capture a full year of relevant data.
For care providers running rotas across multiple sites, mixing permanent and bank workers, and handling enhancements that vary by shift type, this is genuinely demanding work to do by hand.
And the detail matters. A single overlooked enhancement, repeated across a workforce of two hundred and a holiday year, can compound into a sum no provider wants to be defending. The reverse is also true: done properly, a 52-week calculation gives both employer and employee a figure they can stand behind, with the evidence to support it.
Fairness matters more in care than most
The workforce that staffs our care homes, supports people in their own homes, and looks after vulnerable adults in supported living is not, on the whole, a highly paid one.
Margins are tight for providers and tighter still for the people doing the work. When a carer hesitates to book a week off because they cannot afford the dip in their pay packet, the consequence is not a payroll inconvenience. It’s someone who does not rest, who returns to a demanding role without the recovery time they are legally entitled to, and whose wellbeing, over time, frays.
That fraying matters because the quality of care is inseparable from the wellbeing of the people delivering it. A carer who feels their employer has done right by them, who can take leave without financial anxiety, who trusts that their payslip reflects the effort they put in, is a carer who stays.
Where to start if you’re reviewing your position
For providers taking a fresh look at their arrangements, the practical steps are reasonably consistent.
- Begin with a clear-eyed look at who in the workforce is regularly working beyond their contracted hours, and what payments sit alongside those hours.
- Map the categories of overtime and allowance against the ACAS framework.
- Check that the payroll system can apply the 52-week averaging method accurately, exclude unpaid weeks, and produce a clear audit trail showing how each holiday pay figure has been reached.
- Make sure HR and payroll colleagues understand the current expectations, because the people answering staff questions about payslips are the first line of confidence in the system.
Providers who navigate this well tend to share a trait: they treat payroll not as a back-office function but as part of how the organisation looks after its workforce.
The legislation is, in the end, asking employers to pay people fairly for the work they actually do.
The updated ACAS guidance also confirms that other regular payments linked to normal work patterns, such as certain allowances or commission payments, may also need to be included when calculating statutory holiday pay.
Your obligation is to ensure your approach reflects both legal requirements and best practice guidance. The changes introduced by ACAS are designed to ensure employees receive fair pay during periods of annual leave and to reduce the risk of workers being discouraged from taking leave due to reduced earnings.
By implementing compliant payroll processes, you can support employee wellbeing while also strengthening governance and employment compliance standards across the business.
As part of your ongoing commitment to compliance, you will need to continue to monitor developments in employment law and ACAS guidance, including future changes relating to holiday pay record-keeping requirements and working time regulations.
At Syncurio, we continually review our employment practices to ensure they align with the latest UK employment legislation and ACAS guidance. Following the updated ACAS guidance on annual leave and holiday pay, we are pleased to confirm that payroll and holiday pay processes meet the current requirements relating to employees who work regular overtime.
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