Workers in line for extra holiday pay if they work paid overtime

A ruling at the Employment Appeal Tribunal yesterday means that some five million workers could get extra holiday pay in future.

The European Working Time Directive, which was brought into law in the UK as far back as 1998, states that employees should receive their 'normal' pay when they go on annual leave. The tribunal found that Britain had been misinterpreting the directive by not including regular overtime when calculating holiday pay.

The rules affect up to one in six workers in the UK who are regularly paid for overtime as part of their ‘normal’ working pattern. In future, their holiday pay calculations must include the overtime they routinely work above their contracted hours. This is most likely to affect people who work in retail, manufacturing, construction and maintenance, where overtime is frequently paid for.

However, people who work over their contracted hours e.g. in an office, but do not get paid for it will not get extra holiday pay, as these hours are not paid overtime.

The Tribunal has also put a limit on the timeframe for payouts to be made regarding holiday that has already been taken, which limits the impact on companies who had feared backdated claims running back many years. In fact, workers can only make a claim to have overtime hours added to holiday pay for holidays taken within the last three months.

In response to the ruling, Business Secretary Vince Cable has announced a taskforce is being set up to ‘assess the possible impact of the ruling.’

If you’d like more information on making a claim for the overtime element of holiday pay, please contact Ashley Hunt, Vaishali Thakerar or Carrie-Ann Randall at Lawson-West on 0116 212 1000 as soon as possible. Remember you only have a limited amount of time to make a claim.

View all