chester

Chester 01244 405 555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

shrewsbury

Shrewsbury 01743 443043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Greater Manchester 0333 241 6886

Kennedy House,
31 Stamford St,
Altrincham WA14 1ES

7th October, 2013

Employment Tribunal holds overtime must be included in holiday pay


In the recent case of Neal v Freightliner Ltd ET/1315342/12, the Employment Tribunal held that in light of European Law, overtime must be taken into account when calculating statutory holiday pay for the four weeks’ minimum statutory annual leave as provided for by the Working Time Directive (“WTD”).

Although the WTD states that workers are entitled to four weeks’ minimum paid annual leave, it does not specify how holiday pay for this period should be calculated. The WTD confirms that this is determined by national legislation and/or practice. In the case of Robinson-Steele v RD Retail Service Ltd [2006] ICR 932, the European Court of Justice (“ECJ”) held that “paid annual leave” in Article 7 means that workers on holiday should receive their “normal remuneration”. The case of Williams and others v British Airways plc [2011] IRLR 948 expanded on this definition of “normal remuneration” to include not only basic salary but also remuneration “intrinsically linked to the performance of the tasks” that the individual is required to carry out under their contract of employment.

The WTD is implemented in Great Britain through the Working Time Regulations 1998 (“WTR”). This provides workers with the right to take 5.6 weeks’ paid holiday in each leave year. Regulation 16 of the WTR states that holiday pay must be calculated using the definition of a “week’s pay” for each week of holiday as is found in the Employment Rights Act 1996 (“ERA”). Overtime is disregarded under these provisions for the purposes of calculating holiday pay. It was decided in Williams that regulation 16 of the WTR should be amended so that the provisions relating to overtime in the ERA are not applicable to holiday pay.

The Claimant, Mr Neal, argued that in light of Williams, he should have been paid overtime when his employer calculated his statutory holiday entitlement. The Judge recognised that during overtime the Claimant was actually performing tasks required of him under his contract of employment. Although he may have volunteered for the overtime, this did not mean it was not intrinsically linked to the performance of his tasks. The Tribunal therefore held that his overtime hours, pay and related premium should be included in the holiday pay calculation.

The decision to include payments of voluntary overtime when calculating statutory holiday pay is important; however it is not binding. We therefore await consideration of this matter from the higher courts. In the meantime, employers should consider taking overtime into account when calculating holiday pay for its workers.

For further information or advice relating to holiday pay, please contact Helen Watson on 01244 405565 or send an email to [email protected]

 



Contact Us

You might also be interested in...

A Sponsor Licence and Skilled Workers: Employing overseas nationals

22nd November, 2022

With a growing labour shortage in the UK, it is becoming more prevalent for UK businesses to begin... Read More »

Health and Care Worker

Routes to the UK: The Health and Care Worker Visa

22nd November, 2022

It is well reported that the UK has been experiencing labour shortages in the health sector for a... Read More »

The World Cup 2022: HR and employment law issues employers may face

18th November, 2022

With the 2022 FIFA World Cup just around the corner, and a month of football ahead, our employment... Read More »

Contact Us