Monthly Archives: August 2013

Statutory Holiday Pay Must Include Overtime

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SUMMARY: An Employment Tribunal holds that holiday pay should include overtime payments in respect of 4 weeks’ annual leave.on holiday

Background

Mr N worked as an operative and his employment contract provided for a 35-hour week consisting of seven-hour shifts.  However, it stated that he “may be required to work overtime when necessary”.

Mr N actually worked 8.5 or 9 hour shifts (as set out by the roster) and occasionally 12-hour shifts to cover for colleagues.

Mr N’s employer paid him basic pay (i.e. 35 hours a week) for his annual leave.  This basic pay did not include any allowance for overtime.

Mr N claimed for his holiday pay in accordance with the Working Time Directive (which refers to 4 weeks’ holiday, rather than the full 5.6 week entitlement required by UK law) to be calculated with reference to all the hours that he worked, including weekend work, night work and overtime.

The Employment Tribunal’s decision

The Employment Tribunal upheld Mr N’s claim.

The Employment Tribunal referred to recent case law and in particular the notion that a worker’s entitlement to receive normal remuneration during annual leave is so that he is in a position as regards remuneration which is comparable to periods of work.

The Employment Tribunal indicated that it did not matter that Mr N might have volunteered to undertake the overtime, commenting that the employer controls the terms upon which work is offered at the outset of employment and subsequently with regard to overtime.  This meant that an employer could prevent excessive hours being worked.

Mr N was able to claim back to 2007 for arrears of holiday payment.

What does this mean for employers?

Employers should calculate holiday pay, for at least 4 weeks of the employees’ annual leave entitlement, to include overtime and/or other allowances that the employee is usually paid.  This includes voluntary overtime.

If employers do not calculate holiday pay in this way, there is a risk that an employee will bring a claim for unlawful deductions from wages, seeking the difference between their holiday pay paid and the amount they should have been paid if other allowances had been included in the calculation, going back for a period of up to 6 years.

If employers carry this out for only a 4 week annual leave period, this may of course, be an administrative nightmare, so employers may decide to calculate the whole amount of any holiday pay to include all other allowances.

However, employers should also bear in mind that this was only the decision of an Employment Tribunal and it may be that the Employment Appeal Tribunal or Court of Appeal would have a different view on the matter.  This case is unlikely to be the final word on this subject.

Case: Neal v Freightliner Ltd ET/1315342/12

Hazel Robbins, Solicitor

 

Contact Details

For more details about this case or calculating holiday pay please contact:

fgmedia@floydgraham.co.uk

+44 (0) 1604 871143

This update is for general guidance only and does not constitute definitive advice. 

Elisabeth the Chef

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“Elisabeth the Chef has been associated with FG Solicitors from its inception. It would be fair to say that we had previously held mixed views on our opinion of Employment Law service providers due mainly to the apparent inability or unwillingness to work hard to find solutions to potentially problematic issues.

I am pleased to say that in Floyd and his developing team we found an organisation that is willing and able to find pragmatic solutions for dealing with sometimes difficult situations whilst always keeping us updated as to the inherent risks, thus enabling us to make informed decisions as to our proposed strategy.”

Robert Moorhouse, Group Finance Director – Elisabeth the Chef
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