Edita, The key things are:

• You must enter the actual number of hours worked each week (obviously, without that information the system cannot keep track of entitlement)
• You enter holiday pay hours using the Holiday Pay code when you pay holiday. The system can calculate the rate at which such hours should be paid automatically, based on the weighted average of the last 12 weeks pay.
• You set up the payroll holiday year on the payroll Advanced tab
• You ignore the greyed out holiday fields on the HR tab for hourly paid employees, those fields are for salaried staff
• You can report holiday hours information on the payroll report Annual Hours Summary . This report shows 3 lines for each employee:
  • The top line is the number of hours worked in each calendar month in the holiday year
  • The middle line is the resulting number of holiday hours (12.1% of hours worked)
  • The bottom line is the number of holiday hours paid, this number is automatically subtracted from the middle line so that you can keep track of net entitlement.
• Payslips can show holiday accrual information by selecting holiday text on the payroll "Reporting" tab. Pick one of the "Accrued" styles, such as "Accrued Percentage of Hours"

When you've given it a try that may give rise to some more specific questions.

We aren't aware of any BERR sanctioned method of calculating how many hours make up a day, or a week.

The software calculates your obligation to the employee in terms of the number of paid holiday hours you owe them and the rate they should be paid at. The number of days that the employee should take off to enjoy their holiday hours is a matter between you and them. Typically when you have employees on these kind of irregular arrangements there are plenty of days that they don't come in to work... who is to say whether those days are holiday or not?

EDIT: If you want an objective calculation you could divide the number of hours worked so far in the year (as shown on the annual hours summary) by the number of weeks so far in the year. That would give you a figure for hours worked per week. How many hours per day that equates to would depend on the employees "usual" working pattern, if there is any such thing. The software has no real way of assessing that.