Workers have today won a groundbreaking case at the Employment Appeal Tribunal to include overtime in holiday pay. Previously when calculating holiday pay employers would only consider the employee’s basic pay however this ruling now means that people working voluntary overtime could claim for additional holiday pay.
A ruling is yet to be made on whether claims can be backdated.
The right of appeal has been granted and given the financial implications for companies it is suggested that an appeal is likely.
The government estimates that one-sixth of the 30.8 million people in work get paid overtime. This means around five million workers could be entitled to more holiday pay.
The coalition and business groups had argued strongly that overtime should not be included in holiday pay calculations.
The cases centre on the interpretation of the EU-wide Working Time Directive, and in particular the Working Time Regulations implemented in the UK in 1998. The tribunal ruling suggests that UK companies have been interpreting the EU directive wrongly.
The ruling has widespread implications for all companies paying overtime to their staff and companies are advised to consider the use of over time in their business.
For further help and advice on how this decision may impact your business please contact our Employment Team on 01302 341344.