Holiday Pay & Overtime

Dear Jenny 

I have heard that holiday pay will now include overtime and I might be able to get a back payment to 1998, is this correct? 

Thank you for your question. There was a new ruling following the Bear Scotland case which may potentially have an impact on your holiday pay. The ruling has decided that overtime should be included in your holiday pay. However, this is yet to be appealed and the exact ramifications are not yet known for sure. Also it only includes ‘regular’ overtime. This means that your overtime must form part of your regular pay. 

Currently your holiday pay is calculated on basic pay, but what this ruling means is that your holiday pay may now include regular overtime. You can calculate regular overtime by taking the last 12 weeks’ pay and taking an average of that pay to calculate your holiday pay. The extra pay however is only payable on your 4.6 weeks holiday pay and not your additional holiday pay of 1.6 weeks. Put simply, it does not have to include bank holidays. So it might not be as much as you think. 

As for back payments, at the moment nothing has been decided and claims may be rejected until the Court of Appeal process has been carried out. There is also the issue that if your last holiday was longer than 3 months ago, then you lose the right to make a claim. 

However, your employer should start to include qualifying overtime in your holiday pay as from now and this should also include regular commission. 

If you have any questions about your holiday pay and what you are entitled to then please contact me on j.nuttall@livingstons.co.uk or phone 01229 585555 and I will be happy to help you calculate this. 

Coronavirus

Our employment team has received a huge number of requests for help from companies who are unsure how to interpret Government guidance and how best to deal with their employees at this difficult time. 

We are producing regular factsheets for our employees which explain the latest Government guidance.  Our factsheets also sets out practical advice on issues such as furloughing (the new procedures by which employees can remain at home but employers can claim a grant to cover their wages), re-negotiation of contracts and sick pay. 

If you would like to receive these factsheets, please contact Gail Black of our employment team at g.black@livingstons.co.uk.  If you have any specific queries about any particular employment issue, please e-mail Gail Black or Steve Walker at s.walker@livingstons.co.uk.

Full details of how we are dealing with Coronavirus are available here.

We will do everything possible to keep disruption to a minimum during this difficult time.