Posted by admin - November 6, 2014 2:41 pm Employment Appeal Tribunal rules overtime does count when calculating holiday pay

Employment Appeal Tribunal ruling

An historic decision has been made this week with an Employment Appeal Tribunal ruling that UK employers must now also take into consideration their employees regular overtime when calculating holiday pay. In addition, workers may also be able to backdate any claims, but will not be able to do so, if there has been a gap of more than three months since the holiday.

Currently, the UK Government’s interpretation of the Working Time Directive means that UK companies have only calculated the entitlement to holiday pay based on basic pay. The companies involved in the Tribunal case have been given the right to appeal but following these rulings Employers are advised to review their procedures and policies with regards the calculation of holiday pay entitlement.

Reaction from the British Chamber of Commerce and the UK Government

BCC executive director of policy and public affairs Adam Marshall of The British Chambers of Commerce has slated this decision saying, “The pressure being placed on businesses by both the British tribunals and European courts on the issue of holiday pay is becoming unbearable. After the worst recession in living memory, with many companies working to reverse pay cuts and invest in their employees, giant new pay claims could be a huge blow to their growth prospects.”
Government statistics indicate that one-sixth of the 30.8m people in work, around five million workers, get paid overtime. Vince Cable Secretary of State for Business, Innovation and Skills, is now looking to establish a new task force which will be charged with judging the full impact on business of this week’s ruling.

Further news will be posted once more information is available.

For any help with your payroll please contact your local MFW office who will be pleased to assist.