Employees have won a ground-breaking case at the Employment Appeal Tribunal to include compulsory overtime in their holiday pay.
This means some people working compulsory overtime could claim for additional holiday pay. Currently, only basic pay counts when calculating holiday pay. The tribunal ruled that workers can also make backdated claims, but only for a limited period.
The matter may not be concluded, however, as the ruling could be referred to the Court of Appeal, meaning a final decision is yet to be made and could still take considerable time to be finally agreed.
The ruling has widespread implications for companies where staff are required to do overtime as a regular part of their job. Williams v British Airways was a key case and precedent, with pilots having regular allowances included when calculating holiday pay.
It is not clear on whether the ruling applies to workers doing voluntary overtime. Even though it was not spelt out in the ruling, reference was made to 'normal hours' meaning regular voluntary overtime could be included when calculating holiday pay as well. It is possible there will be further case law in the near future on this point.
Employment Associate Paul Burton says, "Until now, workers who do regular overtime have often been less financially well off for taking the holiday they are legally entitled to and this may have acted as a deterrent for them taking the holiday. This is what the courts and tribunals do not like. However, the good news for employers is that the opportunity for workers to claim back pay is limited, which can only be right as employers have been acting in accordance with what they could reasonably believe was the law at the time."
At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and Kate or Paul will be happy to discuss it with you.
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