Hot off the Press! Big changes to holiday pay!

November 6, 2014 By SGW Payroll | Budget

Before the changes came into play, voluntary overtimes was not typically included when calculating a worker’s rate of holiday pay.

The ruling has clarified that:

  • Workers should have voluntary and compulsory overtime taken into account when they are being paid annual leave.
  • Anybody making a claim must have had an underpayment for holiday pay that has taken place within 3 months of lodging an employment tribunal claim.
  • If a claim involves a series of underpayments, any claims for the earlier underpayments will fail if there has been a break of more than three months between such underpayments.

This only applies to 4 weeks (20 days) of a worker’s annual leave. It does not apply to the further 1.6 (8 days) weeks of additional annual leave required under the UK Working Time Regulations, or to any further contractually enhanced annual leave allowances.

Leave to appeal to the court of Appeal has been granted. This means this case will be re-argued next year and a further ruling from a higher Court will be made (with the genuine possibility of a further appeal to the Supreme Court). It is important for all employers to review practices and risk in the light of this decision, but not to bear in mind that this is an on-going matter which may change as the appeal process progresses.

It is important that you communicate with your employees to make them aware that you are aware of the change, that you will be monitoring how the appeal process progresses, that you will take action as appropriate and to provide your employees with the opportunity to raise any concerns with you that they may have.


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