Overtime pay to be included in holiday pay

In an important ruling for employers, the Employment Appeal Tribunal (EAT) has this week held in the conjoined case of Bear Scotland Ltd and ors v Fulton and ors that workers’ holiday pay should be calculated to include normal non-guaranteed overtime pay.

The key aspects of the decision are as follows:-

  • workers are entitled to be paid a sum of money to reflect normal non-guaranteed overtime as part of their annual leave payments
  • that applies only to the basic 4 weeks’ leave granted under the Working Time Directive, not the additional 1.6 weeks under regulation 13A of the Working Time Regulations
  • claims for arrears of holiday pay will be out of time if there has been a break of more than three months between successive underpayments;
  • travel time payments, which exceed expenses incurred and so amount to additional taxable remuneration, should also be reflected when calculating holiday pay.

The government has already announced that it is setting up a taskforce with the express aim of discussing how the impact of the ruling on business can be limited and the EAT has given permission for the employers to appeal its decision to the Court of Appeal.


Mogers Drewett

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