Overtime Should Count in Holiday Pay
A ground breaking case has been won by workers at the Employment Appeal Tribunal. This case will see overtime being included in holiday pay.
This means that those who work overtime can claim for additional holiday pay – rather than holiday pay being calculated solely using basic pay. However, it is possible that the ruling could be referred to the Court of Appeal so the decision may not be made for several years.
This ruling has caused many implications for companies where employees are required to do overtime as a part of their role. However, it is not clear whether this ruling would apply to employees who do overtime voluntarily.
It has been found that some employees get penalised for taking time off that they are entitled to – so this ruling means the employers have got to ensure they are aware of what their employees are entitled to and allow them the time off and pay that they deserve.
Within the UK, there are 30.8 million people who work with 5 million doing overtime whether it is voluntary or compulsory. 23% of full time working men and 15% of part time men work overtime and 12% of full time women and 15% of part time women do overtime.
The coalition and business groups have argued strongly that overtime should not be included in holiday pay calculations as they are particularly concerned about a raft of back payments potentially going back many years. However, backdated claims have been limited – so employees cannot claim more than three months after the last incorrect payment.
It has also been argued that this could cause a real blow to UK businesses who face the prospect of punitive costs. They could potentially have to spend out billions of pounds and not all companies will survive this – which could mean significant job losses.