New Holiday Pay Calculations

You may have heard or perhaps seen news coverage regarding holiday pay and the EAT (Employee Appeal Tribunal) judgement which stated involuntary overtime should be included when calculating an employee’s rate of pay whilst on holiday.

In the past, holiday pay has been calculated on “a week’s pay” – this calculation excludes additional payments such as overtime, commissions and bonuses.

The EAT has said that overtime payments in the period leading up to the holiday must be taken into account in the calculation of holiday pay.  The calculation will have to be made over a 12 week period prior to any holiday.

What is important to note is, this judgement is retrospective (a retrospective period of 3 months) – it means that many employers will now face claims for “holiday back pay”.

Claims of this kind can be pursued as if they are a series of unauthorised deductions from pay which basically means employers can be taken to a Tribunal Court.

Commission has already been found to be part of the “normal remuneration” by the Court of Justice of the EU which means that, as well as overtime, employers will have to include commission as part of the holiday pay calculation.

If you are an employer you need to review how holiday pay is calculated and paid across your workforce.

As soon as further clarification about the ruling is available we will ensure the information is posted onto our website, so please periodically refer back to our site.