EAT Rules that overtime should count when calculating holiday pay


Holiday Pay and Overtime Calculations

Today, in a ground breaking case, the EAT has held that overtime should be included when calculating holiday pay. Currently holiday pay is calculated based on basic pay. This decision will have huge financial implications for UK businesses not only moving forward but in respect of claims for backdated pay.

The timing of this decision is particularly tough when many businesses were just starting to see a brighter future. The position as regards to backdated pay has yet to be released but with figures suggesting that 1/6th of our 30.8 million workers get paid overtime, we cannot underestimate the implication of this decision. What will this lead to? We think that an appeal will most certainly be lodged and we may see employers ceasing to offer overtime in the very near future.

If you have any questions regarding the ruling or the implications for your business please contact the experts at Premier Legal on: 0845 070 0505 (Please note: Calls to this number will cost approximately 4p per minute plus your telephone company’s access charge) or call our head office in Nottingham on: 0115 988 6211.

All of this came about because of a group of cases heard in Scotland, you may remember that the case on this issue settled in England so it did not get to an appeal.

The cases concerned were decided in the Claimant’s favour at the employment tribunal in Glasgow. The Respondents in the cases appealed. The cases at the EAT were Bear Scotland Ltd v Fulton and another; Hertel (UK) Ltd v Wood and others; Amec Group Ltd v Law and others. For those of you interested in the judgment it can be found by clicking here: EAT Judgment.

The judgment also means that the government has not implemented the EU Directive, that the Working Time Regulations are based on, correctly, therefore they will have to rewrite the legislation so that it is compliant. Of course, it is unlikely that anything will happen on that front until the court of appeal has had their input.