Overtime payments should be included in holiday pay following a landmark ruling, which could affect thousands of workers across the North East.
The Employment Appeal Tribunal has ruled that, for workers who regularly receive additional payments like overtime, commission or bonuses, these must be included in the pay they receive when they take annual leave – it is unlawful for employers to simply pay such people their basic salary.
Previously, additional payments only had to be included in holiday pay if the worker was contractually obliged to carry out the additional work. For example, if the worker’s contract stated he or she had to work 10 hours overtime per fortnight, then they should have been paid this on top of their normal salary when they took holiday. However, if the employee merely had the option of working 10 hours overtime – even if in reality they always did the extra work – they would not be paid for it during their holiday.
Following the decision in Bear Scotland Limited V Fulton, handed down on 4 November 2014, it is now unlawful for employers not to include extra payments like overtime or commission in workers’ holiday pay. Anyone who regularly receives additional payments, whether they have a choice to do the work or not – but who does not receive these payments when they take holiday – may have a claim.
The ruling puts the UK in line with European law, which aims to protect the health and safety of workers by guaranteeing them a minimum of four weeks’ paid annual leave. If people are paid less when they take their holiday than when they do not, there is a danger that they will be discouraged from taking enough time off from work, putting their wellbeing at risk.
A new holiday pay claim arises each time someone who is entitled to additional payments takes a holiday and does not receive them. This is what is known as an “unlawful deduction.”
There are very strict deadlines for bringing holiday pay claims in the Employment Tribunal, and employers may take measure to stop workers from claiming the money they are owed. Anyone who thinks they may have a claim should speak to a solicitor as soon as possible. Claims must be brought within three months less one day from the date if the most recent deduction, namely the last time the worker took holiday and was not paid their full entitlement (subject to ACAS Early Conciliation),.
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