EAT Rules that Holiday Pay should Include Overtime

The Employment Appeal Tribunal (EAT) has held that regular, non-guaranteed overtime, voluntary overtime and worker’s commission should be included in holiday pay calculations.

This is a significant decision for employers because the EAT is the first authority to decide that entirely voluntary overtime should be included in holiday pay.

The decision is the latest high-profile case concerning the question of whether or not elements of pay such as overtime and commission should be included in holiday pay. It states that workers’ holiday pay for the four weeks’ annual leave to which they are entitled under EU law should reflect payments that they receive for overtime.

The possibility of workers claiming for holiday pay underpayments dating back for years as a series of unlawful deductions is limited.

While each case will turn on its own facts, employers that offer voluntary overtime will need to consider whether or not their overtime payments are sufficiently “regular and settled” to require inclusion in holiday pay.

Source:   XpertHR, 4th August 2017