At Freenow, we want to make sure you're always clear on how your earnings work. We’ve put together this guide to help you understand your holiday pay and how we calculate the National Living Wage.
How we calculate your holiday pay
Your holiday pay is calculated as 12.07% of your applicable earnings. This percentage is the standard rate used for rolled-up holiday pay to reflect your legal entitlement.
What counts as applicable earnings?
We include the following in our calculation:
Trip earnings
Incentives
Any National Living Wage (NLW) top-ups
Please note that we don't include vehicle expenses in this calculation.
Holiday pay and National Living Wage calculations
To help you understand exactly how the holiday pay and NMW figures are calculated, we have broken the process down into four steps.
Step 1: We work out your net trip earnings for the week. We start with your earnings from that week: trip fares, cancellation fees, and waiting time fees. We then subtract anything you owe us (for example, outstanding debits) and add anything owed to you (credits or fare adjustments). We also remove vehicle expenses as these don't count towards holiday pay calculations.
Step 2: We add any National Living Wage (NLW) top-up. If your earnings sum from Step 1 is below the National Living Wage for the hours you worked, we top you up to the legal minimum. That top-up is then included in your holiday pay calculations, so if you received a top-up, your holiday pay reflects it.
Step 3: We subtract any previous debts. If you have an outstanding balance with us from an earlier period, this is deducted at this stage: after your earnings and top-up are combined, before holiday pay is calculated.
Step 4: We apply the 12.07% holiday pay rate. The sum of Steps 1–3 is your applicable earnings for the week. Holiday pay is 12.07% of that figure. This is the standard statutory rate for rolled-up holiday pay.
FAQ's
Why is the holiday pay shown on my trip offer card only an estimate?
Because Steps 1–3 depend on your whole week's activity, including anything that happens on later trips, corrections, or top-ups, we can only estimate holiday pay per trip. The final figure is confirmed once the week closes.
What's the difference between the estimate and the "holiday pay top-up" on my invoice?
At the end of the week we compare (a) the total of all your per-trip estimates and (b) the actual amount calculated using the four steps above. If (b) is higher, you get the difference as a top-up. If (a) was higher, you keep the extra. Your pay is never reduced to match the final figure.
What happens if my estimated holiday pay is higher than the final amount?
If your trip estimates happen to exceed the final weekly calculation, you keep the extra amount. Your pay is never reduced.
Why are vehicle expenses excluded?
Vehicle expenses (e.g. fuel, rental) aren't counted as earnings for tax or National Living Wage purposes, so they're excluded from holiday pay too.
What counts as a "previous debt"?
This is any balance you owe us that was already agreed or identified in an earlier week (for example, from a payment correction) and is still outstanding. It's deducted before the holiday pay percentage is applied, which is why it can affect your final figure even if your trip earnings that week were unaffected.
Where does the 12.07% rate come from?
It's the standard UK statutory calculation for rolled-up holiday pay: 5.6 weeks of statutory annual leave divided by the 46.4 remaining working weeks in the year, expressed as a percentage.
Why did my NLW top-up affect my holiday pay?
The top-up brings your pay up to the legal minimum for hours worked. Legally, holiday pay has to reflect what you were actually paid, including that top-up, not just your trip earnings before the top-up was applied.