Holiday pay calculations in Ireland
Reviewed by Mellow Editorial Team, HR & payroll content team
Holiday pay in Ireland is calculated based on normal weekly pay — including regular bonuses and allowances, but not overtime. Employees are entitled to 4 working weeks of paid annual leave per year, and the pay they receive during that leave must reflect what they would normally earn.
The basic entitlement
Most employees in Ireland are entitled to 4 working weeks of paid annual leave per year under the Organisation of Working Time Act 1997. Part-time or irregular-hours workers may accrue leave differently — typically 8% of hours worked, capped at 4 weeks — but the principle is the same: leave should be paid.
The right to paid leave applies from day one of employment. There is no qualifying period before an employee starts accruing holiday entitlement.
What counts as "normal weekly pay"
This is where employers often get it wrong. Holiday pay must reflect what an employee normally earns, not just their basic hourly rate.
Under Irish law, normal weekly pay includes:
- Basic wages or salary
- Regular bonuses that are paid in conjunction with work done (not discretionary one-offs)
- Regular allowances that are tied to the work itself, such as a tool allowance paid every week
It does not include:
- Overtime (unless it is guaranteed and regular — a grey area worth taking legal advice on)
- Expenses or reimbursements
- Genuinely discretionary bonuses
The Workplace Relations Commission (WRC) has repeatedly upheld claims where employers paid only basic rate during holidays while employees regularly earned allowances or bonuses during normal working weeks. If someone earns €600 a typical week but you pay them €450 during annual leave, you are likely underpaying.
How to calculate holiday pay in practice
For a salaried employee on a fixed weekly rate, the calculation is straightforward: pay them their normal weekly salary for each week of leave taken.
For employees with variable pay, the most common approach is to average earnings over a reference period. Irish law points to the 13 weeks immediately before the leave as the relevant reference period — you take what the employee earned in those 13 weeks (excluding any weeks where no work was done) and divide by 13 to get an average weekly figure.
Example: An employee earns a mix of basic pay and a regular attendance bonus. Over the 13 weeks before their two-week holiday, they earned a total of €9,100. Divide by 13 to get €700 average weekly pay. That is what they should receive for each week of leave — €1,400 for the two weeks.
If the employee worked fewer than 13 weeks for you, use however many weeks are available.
Public holidays
Ireland has 10 public holidays per year. These are separate from the 4-week annual leave entitlement — they sit on top of it. An employee who works on a public holiday is entitled to a benefit: either a paid day off, an additional day's annual leave, or an additional day's pay. Employees who do not normally work on the day the public holiday falls are still entitled to one-fifth of their normal weekly pay for that day.
Public holiday pay follows the same logic as annual leave pay — it should reflect normal earnings, not just basic rate.
Paying holiday pay on termination
When an employee leaves — whether through resignation, redundancy or dismissal — any outstanding annual leave must be paid out. You calculate what leave they have accrued in the current leave year, subtract any leave already taken, and pay the balance at the normal weekly rate (using the 13-week average where applicable).
This is a statutory entitlement. Withholding it, or paying it at a lower rate than normal earnings, leaves an employer exposed to a WRC claim. The time limit for such claims is generally six months from the date of the alleged contravention, extendable to 12 months in exceptional circumstances.
Common mistakes to avoid
A few patterns come up repeatedly in WRC decisions:
Paying basic rate only. If regular allowances or bonuses form part of normal weekly pay, they must be included in holiday pay.
Using the wrong reference period. The 13-week period should exclude unpaid weeks. Do not simply take the last 13 calendar weeks if some of those weeks had no earnings.
Confusing annual leave with public holidays. They are separate entitlements with separate rules. Make sure your payroll system tracks them independently.
Not accruing leave during sick leave. Employees continue to accrue statutory annual leave during certified sick leave. If they cannot take leave due to illness, they are entitled to carry it over.
Getting holiday pay right is not complicated once you understand what normal weekly pay actually means in an Irish context — but it does require you to look beyond the basic hourly or weekly rate when your employees regularly earn more than that.
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