November 13, 2014

EAT reaches decision on holiday pay and overtime

EAT reaches decision on holiday pay and overtime

 

In response and following the decision on the 4th November from the Employment Appeal Tribunal (EAT), confirming that non-guaranteed overtime payments (overtime which the employee must work if offered) should form part of an employee’s holiday pay, please see below for further details:

In summary, a practical view of the judgment is:

•   The pay for the first twenty days of a full-time employee’s holiday (pro-rata for a part-time employee) should be calculated to include payments they have previously received for overtime they have to do when asked.

•    Overtime an employee had the option of turning down but did anyway should probably also be included in the calculation of holiday pay for the first twenty days of a full-time employee’s holiday.

•    When calculating what overtime should be included in holiday pay for the first twenty days of a full-time employee’s holiday, the 12 weeks prior to the holiday are, probably, what should be looked at.

•    Under this ruling and subject to any appeal, the ability to claim back pay has been limited. Employees may not be able to apply for backdated claims for unpaid holiday overtime if more than three months has passed since their last holiday.

If you find that you may fall into the realms of having to pay holiday pay based on overtime payments, and indeed any backdated claims, start to prepare your calculations as to what each applicable member of staff may be owed and look to carry out an audit so that you are aware of the different payments your employees are paid (e.g. voluntary overtime, non-voluntary overtime) which may affect the calculations for holiday pay.

If you have any questions about this or any other employment law / HR issue, please don’t hesitate to contact us.

 

 

 

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