Be aware of changes to holiday pay calculations

With the sun streaming in through the office windows in August and September, employers and employees alike are thinking about their summer vacation – but do you know what holiday pay your employees are entitled to?

This week the UK’s Employment Appeal Tribunal (EAT) has confirmed that voluntary overtime must be included in holiday pay when this is worked regularly enough to constitute ‘normal’ pay. However, the EAT has urged that each situation must be looked at on its own merits to determine if the overtime payments are sufficiently ‘regular and settled’ to require inclusion in holiday pay.

But what does that mean for employers and employees? The team at Rely Ltd – HR & Training in Weymouth, are urging people not to worry about the new ruling and have produced a guide to help employers and employees know their rights.

The new ruling means holiday pay should include: voluntary overtime that is worked regularly, guaranteed overtime that is written into a contract, non-guaranteed overtime, commission and work-related travel time. “This ruling adds a layer of complexity to holiday pay calculations, but employers and employees shouldn’t be worried,” says Nicky Cooksley, managing director at Rely Ltd.

“We would advise that, in general, no matter what the working pattern of an employee, they should still receive holiday pay based on a ‘week’s normal payment.’ This usually means their weekly wage but may include allowances or similar payments.”

For employees on a fixed hours their contract holiday pay will be a normal week’s wages. For those on shifts or with no fixed hours, then a ‘normal week’ would be worked out by the average pay or hours across the last 12 weeks.

For more help or advice about the changes to holiday pay, contact Rely Ltd, HR & Training on 01305 831706 or email enquiries@rely.company