Working overtime may lead to additional holiday pay

People that work voluntary overtime may claim for additional holiday pay in the future following a ground breaking ruling by the Employment Appeal Tribunal. The ruling has significant implications for many companies both large and small whose employees are required to do overtime as a regular part of their job.

Currently, only basic pay counts when calculating holiday, however the ruling could also lead to backdated claims being made during a limited period. While the Employment Appeal Tribunal refused to grant a reference to the Court of Justice of the European Union, permission was granted to appeal to the Court of Appeal, so a final decision may well be years away.

Four key points from the ruling are:

  • Employees are to be entitled to a paid sum of money reflecting their normal non-guaranteed overtime which forms part of their annual leave payments.
  • The above only applies to the basic four weeks leave under the Working Time Directive and not the additional 1.6 weeks leave under regulation 13A of the Working Time Regulations.
  • Subject to a reasonable practicability test, employees that claim for holiday pay arrears will be out of time if there is a more than a three month break between successive underpayments. 
  • When calculating holiday, travel time payments which exceed expenses incurred and  amounts to additional taxable remuneration, should also be reflected.

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