Holiday Pay Underpayment Complaint Letter Template

If you need to challenge incorrect holiday pay that excludes regular overtime or commission, a written letter is the recommended first step — it creates a clear record and shows you're pursuing the matter formally. Below is what a strong holiday pay underpayment complaint should include, why it matters, and a free tool to generate yours.

Why holiday pay so often gets calculated wrong

Many employers still calculate holiday pay using basic salary alone, ignoring regular overtime, commission, and certain allowances entirely. This isn't a grey area — a series of UK and European court rulings, including the well-known Bear Scotland and Flowers v East of England Ambulance Trust cases, established that "normal remuneration" for holiday pay purposes must reflect what a worker would actually have earned had they been at work, not just their base rate. If overtime is regular and expected rather than occasional and voluntary, it should generally be included in the calculation.

This mistake is common precisely because payroll systems are often set up around contractual basic pay and never updated to reflect case law that developed afterwards. That means the underpayment is frequently not deliberate — but it's still owed.

What this letter needs to cover

• Explain that holiday pay must reflect normal remuneration including regular overtime
• Reference commission and allowances under the Working Time Regulations 1998 and relevant case law
• Set out how you've calculated the difference between what you were paid and what you should have received
• Request recalculation and repayment of arrears for the past 2 years
• Give a reasonable deadline — 14 days is standard — to respond

Working out what you're actually owed

Start by identifying a representative period of your normal working pattern — payslips covering several months showing your regular overtime or commission alongside base pay. Compare what you were actually paid during any period of annual leave against what your average earnings would have been over a comparable working period. The gap between those two figures, multiplied across your leave days, is the amount you're claiming back.

Keep your workings simple and attach the relevant payslips or a summary table — employers are far more likely to engage constructively with a clearly evidenced figure than a vague assertion that "holiday pay is wrong."

Common mistakes that weaken a claim

• Including genuinely voluntary, occasional overtime — if overtime is truly ad hoc and infrequent, it's less likely to count as "normal remuneration." Regular, expected overtime has a much stronger claim.
• Going back further than 2 years without checking the rules — backdated claims are generally limited to a 2-year period under current regulations, and any break of more than 3 months between underpayments can reset that period entirely.
• Not keeping a paper trail — a follow-up email or letter after any verbal conversation protects you if the matter later needs to go further.

What happens if your employer doesn't respond

If there's no response, or the response is unsatisfactory, the next formal step is typically an Employment Tribunal claim for unlawful deduction from wages. You'll usually need to start ACAS early conciliation first — this is a mandatory step before most tribunal claims can proceed, and it often resolves matters without needing a hearing at all. Time limits apply, so don't leave it too long after the employer's response deadline passes.

Frequently Asked Questions

Does this apply to zero-hours or casual workers too?
Yes. Entitlement to accurately calculated holiday pay applies regardless of contract type, provided you qualify as a worker under UK employment law — which the vast majority of zero-hours and casual staff do.

What if I've already left the job?
You can still claim backdated holiday pay after leaving, though time limits for bringing a tribunal claim still apply from your last date of employment, so don't delay.

Do I need a solicitor to send this letter?
No — a clear, well-evidenced letter from you directly is a normal and effective first step. Many employers resolve these matters without any need for legal representation at this stage.

See our full letter template library for related templates, or use our free Employment Tribunal checker for guidance specific to your situation.