Should overtime count when calculating holiday pay?

Two cases are due to be heard together by the EAT on 30-31 July 2014. These are Neal v Freightliner Limited and Bear Scotland Limited v Fulton.

The Tribunal in both cases held that a worker’s overtime, which is non-contractual and not guaranteed, should be taken into account when calculating a worker’s entitlement to holiday pay under the Working Time Regulations 1998. This decision follows on from the Supreme Court ruling in British Airways plc v Williams and Others 2012, which held that employees should be paid their “normal remuneration” during their four weeks’ statutory annual leave.

If the EAT concludes that overtime should be taken into account in calculating holiday pay, the repercussions for employers could be significant as employers who are not currently taking overtime into account when calculating holiday pay could find themselves receiving claims.

We would advise that employers watch this space on the result of these cases, as this may lead to the need to review how employers currently calculate holiday pay.

For more information please contact a member of the Employment Team.

This entry was posted in Devonshires, employment, employment law, UK employment and tagged , . Bookmark the permalink.

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