Holiday Pay

I thought I would send a note out about holiday pay as it has been quite contentious for a while now, with cases going to court.   There was a case last week, which is the latest development on holiday pay.  East of England Ambulance Service NHS Trust v Flowers

The court of appeal gave its judgment and confirmed that both non-guaranteed and voluntary overtime are in scope for inclusion in holiday pay calculations in respect of the 4 weeks ‘working time directive holiday entitlement, provided that the overtime is broadly regular and predictable.  There is no requirement that the overtime is compulsory under the contract of employment.   So where does this leave employers now in determining which payments need to be included in holiday pay?  Looking at all previous case law, the position can now be summarised as follows:

Pay to be included

Pay that is normally received including:

• Contractual results-based commission ordinarily received;
• Guaranteed, compulsory overtime payments;
• Non-guaranteed and voluntary overtime payments provided the overtime worked is broadly regular and predictable;
• Regular out-of-hours standby payments and call-out payments;
• Payments intrinsically linked to the performance of the worker’s tasks under the contract of employment, including allowances for performing a certain task, or at certain times, or in certain conditions e.g. productivity bonuses;
• Payments which relate to professional and personal status.

Pay to be excluded

• Expenses which reimburse workers for actual costs incurred e.g. travel expenses.

Grey areas (not so far considered by the courts)

• Annual bonuses;
• Tips and service charges.

Currently, the reference period for calculating the average pay should be the last 12 weeks prior to taking the holiday.

I am sure there will be more to come on this over the coming months, so I will keep you informed.

Hope this is all clear but any questions, please don’t hesitate to contact me.

Thanks 

Jan 07968 325271