Tribunal backs overtime in holiday pay

Tribunal backs overtime in holiday pay

Overtime should count in holiday pay

Workers have won a ground-breaking case at the Employment Appeal Tribunal to include overtime in holiday pay.

This means some people working overtime could claim for additional holiday pay. Currently, only basic pay counts when calculating holiday pay.

The tribunal also ruled that workers can make backdated claims, but only for a limited period.

However, the ruling could be referred to the Court of Appeal, meaning a final decision may be years away.

The ruling has widespread implications for companies where staff are required to do overtime as a regular part of their job. Lawyers said the tribunal was not clear on whether the ruling applied to workers doing voluntary overtime.

But Caspar Glyn, a barrister specialising in employment law, told the BBC that the ruling effectively meant that: "Normal is pay is normal pay and that should be paid when you're on holiday". Even though this was not spelt out in the ruling, this referred not just to compulsory overtime but to any overtime that is worked on a regular basis, he said.

"Up until now, some workers who are required to do overtime have been penalised for taking the time off they are entitled to," said Howard Beckett of the Unite union.

"This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order."

'Matter of urgency'

The tribunal ruled on three cases - road maintenance company Bear Scotland versus Fulton, engineering firm Amec vs Law and industrial services group Hertel vs Wood. The employees won their original claims and the tribunal has now rejected the companies' appeals.

The coalition and business groups had argued strongly that overtime should not be included in holiday pay calculations. They were particularly concerned about a raft of back payments potentially going back many years.

But backdated claims have been limited, with the tribunal ruling that employees cannot claim more than three months after the last incorrect payment.

After the ruling, Business Secretary Vince Cable said he would be setting up a task force to assess the impact of the ruling.

"Government will review the judgment in detail as a matter of urgency," he said.

"To properly understand the financial exposure employers face, we have set up a task force of representatives from government and business to discuss how we can limit the impact on business."





Businesses are concerned about the extra money they will have to pay out
Business leaders were more forthright.

"This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds - and not all will survive, which could mean significant job losses," said CBI director general John Cridland.

"This judgment must be challenged. We need the UK government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face."