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More possible changes to holiday pay calculations..

We know that this has been an on-going saga and yet it still seems nothing is that clear.

We’ve previously talked to you about the need to include commission (although the definitive case on this was at the Court of Appeal this month) and non-guaranteed compulsory overtime payments in holiday pay – but there is not yet a definitive guide on how these should be calculated.

We’ve previously explained the complication of the difference between the 4 weeks holiday dictated by the EU and so required to take the above into account, and the additional 1.6 weeks holiday that the UK added to statutory holiday entitlements which therefore aren’t required to take the above into account.
 We’ve also previously given you the good news that recent legislative changes put a stop to back dated claims for this additional holiday pay being made over excessively long periods of time – both due to the ruling regarding a three month break between holiday periods, and the amendment to the Employment Rights Act 1996 that means all unlawful deductions claims can only be backdated for a maximum of two years.

So – what’s the latest?

A tribunal recently concluded that voluntary overtime should be taken into account when calculating holiday pay, if it is undertaken with “sufficient regularity”.   You guessed it – there are no guidelines on what constitutes “sufficient regularity!!  Other tribunals do not have to follow this case in their decision making but we anticipate more may well do so….

What should you do?

  • Review your overtimes policy & current overtimes practices and consider if you need to make any changes
  • Review how you currently calculate holiday pay and consider if you need to make any changes
  • Call us if you are not sure!

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