Holiday Pay Must Include Overtime

Holiday Pay Must Include Overtime

Holiday Pay Overtime

New court ruling says holiday pay must include overtime

The Employment Appeal Tribunal (EAT) has ruled that voluntary overtime must be included when calculating employees’ holiday pay.

Previously, it may have been the case that some workers were reluctant to take their full annual leave allowance as they might receive less in the way of income by doing so. It may well have been the case that, when you were taking paid holiday, that you were only receiving your basic salary during this period.

The Tribunal has ruled that levels of holiday pay must correspond to ‘normal remuneration’. However, it also said that, for overtime to be considered as part of an employee’s normal remuneration, it must have been paid for a sufficiently long period of time.

The case was brought by the Unite trade union against Dudley Metropolitan Borough Council. The council employed 56 Unite members as tradesmen, who worked regular overtime, including on Saturdays, on a purely voluntary basis. Some of these employees were said to have been underpaid by as much as £1,500 per year as a result of their overtime not being included in holiday pay.

Giving judgement, Mrs Justice Simler DBE, said:

“It seems to me that once the claimants commenced working a shift of voluntary overtime or a period of standby duty or callout, they were performing tasks required of them under their contracts of employment.”

Unite assistant general secretary for legal services Howard Beckett, said:

“Today’s landmark victory further clarifies the law on holiday pay and is of major significance to workers across the UK. It means employers must now include all earnings, including payments for voluntary duties and overtime, in calculating holiday pay. 

“The ruling means unscrupulous employers no longer have carte blanche to fix artificially low levels of ‘basic’ hours and then contend the rest of time was ‘voluntary’ overtime that did not have to be paid in respect of annual leave.  

“Unite will be liaising with Dudley council and its legal team over reaching a satisfactory settlement for our members. In the meantime, we would urge other employers who have been fleecing workers of their holiday pay to get their house in order or face legal action.”

Previous legal cases have confirmed that you also have the right for regular commission payments, and for compulsory overtime, to be included in your holiday pay.

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