Overtime and Holiday Pay

In November 2014 the Employment Appeal Tribunal (EAT) decided whether non-guaranteed compulsory overtime payments should be included when calculating holiday pay for workers who regularly work overtime.  The EAT ruled that they should.

Those workers who work compulsory overtime as part of a settled pattern should receive holiday pay made up of the hours actually worked, not simply the hours guaranteed by their employment contract.  Therefore, in deciding what to pay someone for a week of holiday, employers must look at the 12-week period immediately prior to the holiday being taken and calculate the weekly average of hours worked.  Similarly, that weekly average will then need to be further prorated in order to calculate the amount of a single day.

Where the amount of holiday pay received is too low, a worker may have a claim in the Employment Tribunal for unlawful deduction from wages against his employer.  This claim has a three-month time limit and so workers must act swiftly if they wish to bring a claim.

The cases which were the subject of the EAT’s decision now look set for an appeal to the Court of Appeal so it may not be the end of the story.

Philip Jacques, Trainee Solicitor in our Employment department

For further advice on how to calculate your employees’ holiday pay or any other aspects of Employment Law, please contact Andrew Firman on andrewfirman@cartercamerons.com or 020 7406 1000.