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Emma O'Connor
Emma O'Connor,
HEAD OF TRAINING
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Non-guaranteed overtime must be taken into account for the purposes of calculating holiday pay
05 November 2014

The EAT yesterday handed down its judgment in Bear Scotland Ltd v Fulton & anor and the other consolidated holiday appeals concerning whether an amount in respect of “non-guaranteed” overtime should be included in a worker’s holiday pay calculation. 

And the answer is … yes it should! However, only in respect of calculating Working Time Directive holiday – that is 4 weeks’ holiday a year - and not any additional holiday under the UK’s Working Time Regulations 1998 (the additional 1.6 weeks). Also, the EAT agreed that certain allowances paid to the workers (radius allowance and travelling time payments) fell within the definition of “normal remuneration” for the purposes of calculating holiday pay. Again, only in respect of Working Time Directive leave. Its decision effectively confirms that all elements of a worker’s normal remuneration – including payments in respect of non-guaranteed overtime – must be taken into account when calculating the basic 4 weeks’ of holiday pay.

How far back could workers seek to recover underpaid holiday pay? Essentially, claims for underpaid holiday pay will be out of time if there has been a gap of more than 3 months between each underpayment.

This is an important decision for employers, although the impact of claims going back over many years has been curtailed by the requirement that there has to be no more than 3 months between each underpayment. 

We will report on the judgment in more detail in next week’s edition.

For more information about the issues raised in this article or to find out more about how the Employment team can help you please contact the team on 0118 952 7284 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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