Financial & Legal News

Calculations for holiday pay to include non-guaranteed overtime

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In a recent appeal hearing, the Employment Appeal Tribunal (“EAT”) decided that employees were entitled to receive holiday pay based on their basic wage plus their non-guaranteed overtime. 

The appeal in Bear Scotland -v- Fulton case (and others) was about whether employees who worked for 44 hours per week (including 6 hours overtime) should have their holiday pay calculated to take into account their non-guaranteed overtime. The law up to the Bear case was that employees were entitled to receive holiday pay based on their basic wage, excluding non-guaranteed overtime. 

The EAT found that workers are entitled to be paid a sum of money to reflect non-guaranteed overtime as part of their holiday leave payments, but only in relation to the four weeks leave they are entitled to under European law.

However, there are time constraints for such claims. The EAT held that an employee’s claim for arrears of holiday pay will be out of time if there has been a break of more than three months since the last holiday taken. So, for example, if an employee was paid their basic pay for a holiday taken in June, then took their next holiday in December, the employer would only have to pay basic pay plus overtime for the December holiday. Any claim in relation to the earlier, June holiday would be out of time. 


For more information and assistance on calculating holiday pay correctly, please contact Susan Mayall on 0161 684 6948 or make an enquiry.


Further information

I’ve written about holiday pay a couple of times recently:

  • Commission, Holiday Pay and Employment Law about the British Gas -v- Lock case (link)
  • A half term reminder about holiday pay: (link)

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

Written by Susan Mayall


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