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Holiday Pay Explained after Judgment on Overtime

A recent decision of the Employment Appeal Tribunal (the Bear Scotland) means that many workers may have a claim for extra holiday pay.

In particular, some workers who have been working overtime for their employer may specifically be able to claim for unpaid holiday pay.

The Bear Scotland case looked at how employers are meant to calculate holiday pay to begin with. You might think that it’s simply a matter of looking at a worker’s weekly or monthly wage and taking it as a multiple of that. But as is often the case things are not always as simple as they seem.

The difficulty lies in exactly what counts as your weekly or monthly pay in the first place. For example, does it include overtime pay or other amounts such as shift allowances?

As for overtime, the decision in this case confirmed that along with guaranteed overtime which had previously been included, non-guaranteed overtime (overtime which a worker is required to work but which an employer is not required to offer) should be included in the calculation. So, if a worker has been doing overtime and yet only received holiday calculated on basic salary then they may well have a claim.  

What’s more, depending upon the facts, certain other payments such as bonuses may also need to be included so it would be worth getting legal advice from an Employment Solicitor if your holiday pay has been lower than your normal pay.

On the face of it, this is good news for workers who may be able to claim some back pay and should have increased holiday pay going forward.

However, there was a sting in the tail from the Tribunal when they limited what can be claimed as backdated holiday pay. Specifically, they said that claims could not be made for periods before the point where there has been a gap of three months from the last incorrect payment of holiday pay. This may be a significant limitation for many potential claims. 

Then, just to add a further complication, it’s possible that the decision could be appealed further to, for example, the Court of Appeal or even to Europe.

So, it’s a step forward for workers who may want to consider making a holiday pay claim but there also remains an element of uncertainty as the dispute potentially continues to wind its way through the various courts.

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