• Facebook
  • Twitter
  • LinkedIn
Call us now: 01243 836 840   [email protected]
Pure Employment Law
  • Who We Are
    • Nicola Brown
    • Peter Stevens
    • David Jones
    • Debbie Poole
    • Linda Nye
    • Brenda Cherry
  • For Employers
    • Advice on HR and People issues
    • Investigations, Hearings and Appeals
    • Restructuring and Redundancy
    • Defending Employment Tribunal Claims
    • Dismissal of Senior Executives
    • Contracts, Handbooks and Policies
    • Employment Law Training
  • For Employees
    • Settlement Agreements
    • Workplace Issues including Disciplinary and Grievance
    • Bringing an Employment Tribunal Claim
  • Employment Law Events
  • Legal Updates
  • Testimonials
  • Vacancies
  • Contact us
  • Search
  • Menu Menu

Overtime to count in holiday pay

4th November 2014

In a very significant case, the Employment Appeal Tribunal in the case of Bear Scotland v Fulton (and others) has this week ruled that overtime should be included as part of workers’ annual leave payments.

The key points from the ruling are:

– A payment for both compulsory and non-guaranteed overtime should be included within a worker’s holiday pay where the overtime was part of the worker’s “normal” earnings.

– Although under UK law workers are entitled to 5.6 weeks’ holiday (28 days for someone who works a 5 day week), it appears these new rules would only apply to the 4 weeks’ (20 days’) leave to which workers are entitled under EU law (the Working Time Directive).

– Claims for under payments of holiday pay will generally be out of time if there has been a break of more than three months between successive underpayments.

– Any payments to workers for travel time which exceed the expenses actually incurred by the worker, should also be reflected when calculating holiday pay, as they amount to taxable remuneration.

– Permission has been granted to the employers involved in the case to appeal to the Court of Appeal.

We know many employers and employees will have a number of questions arising from this decision; however, the decision does not give the answer to many of them. Whilst the media is keen to highlight the potential consequences, a final decision on these issues may still be some time away, which leaves employers in a difficult position in the meantime.

Although there are still lots of grey areas following the ruling, we have prepared the following answers to some of the questions we have already been receiving from clients and contacts:

  •  How long do employees have in which to bring a claim?

According to the judgment, employees must bring a claim for underpayment of holiday pay within three months of the underpayment. This means that employers may be let off the hook for a failure to pay overtime within holiday pay that happened over three months ago.

  •  How far back could claims for underpayments go?

A worker may be able to claim for a series of underpayments of holiday pay. We do not know yet how far back the worker can go; however, we do know that the ‘chain’ of under payments can be broken by a three month gap in the series of under payments. Employers therefore, may only be liable for holiday pay up to the last break in deductions. This would usually be where the employee hasn’t taken any holiday for over three months.

Employers may however still be vulnerable in relation to a breach of contract claim. Employees would have to argue that the entitlement to holiday at the right rate was part of their contract of employment. If successful, their claim of underpaid holiday could go back 6 years (the limitation period for breach of contract claims). We do not know yet know whether such a claim would be successful, but this is highly likely to be challenged.

  •  How should we calculate holiday pay going forward?

We don’t really know at this stage. The ruling states that overtime should be included within a worker’s holiday pay where it has become part of their ‘normal earnings.’ We don’t have any guidance yet as to how ‘normal workings’ should be calculated. It seems likely that it could be the worker’s average earnings over the last twelve weeks (the same period used to calculate a week’s pay for employees without normal working hours), or the worker’s average earnings over a period of 12 months. This will be for the Government to decide.

  • What happens next?

The Government has reacted pretty swiftly to the decision, announcing a “taskforce” to assess the possible impact of the Employment Appeal Tribunal ruling on holiday pay. Significantly the taskforce will include seven business representative groups all of which are employer organisations. This coupled with a tweet from the BIS Press Office stating that the taskforce will “look into limiting impact of #holidaypay ruling” gives a strong indication of whose side the Government is on.

We will of course update you as soon as there are any further developments in this area.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

 

 

 

Share this article
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on LinkedIn
  • Share on Reddit
  • Share by Mail
https://www.pureemploymentlaw.co.uk/wp-content/uploads/2019/02/Pure-Employment-Law-logo.jpg 0 0 Nicola Brown https://www.pureemploymentlaw.co.uk/wp-content/uploads/2019/02/Pure-Employment-Law-logo.jpg Nicola Brown2014-11-04 16:18:192014-12-03 12:42:44Overtime to count in holiday pay

Join our mailing list

* = required field
Mailing Lists


Recent Legal Updates

  • Discrimination found in gender critical belief case 27th July 2022
  • Court of Appeal overturns Tesco fire and rehire injunction 27th July 2022
  • Changes to fit notes 27th July 2022
  • Where are we with the fire and rehire Code of Practice? 27th July 2022
  • Can long Covid be a disability? 29th June 2022
Link to: Contact Us

Any questions? Why not get in touch!

Our advice is always given in plain English without any waffle, and we focus on providing practical solutions to our clients’ problems.

Contact us

LEGAL INFORMATION

Pure Employment Law | 1 Little London, Chichester, West Sussex, PO19 1PH
[email protected] | Tel: 01243 836840

Pure Employment Law is the trading name of Pure Employment Law Limited, registered in England and Wales with company number 07134294 and whose registered office is 1 Little London, Chichester, West Sussex, PO19 1PH. Pure Employment Law Limited is authorised and regulated by the Solicitors Regulation Authority with registration number 533794. A list of the company’s directors is available for inspection at the registered office

DISCLAIMER

The information contained in this website is for general information purposes only. The information is provided by Pure Employment Law and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

Privacy Policy | Cookies Policy | Terms & Conditions | How to make a complaint | Sitemap

© Pure Employment Law 2022

Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies as defined in our cookie policy.

Accept Cookie Policy

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Privacy Policy
Accept settingsHide notification only