Recently the Employment Appeal Tribunal made a decision in regards to what should be taken into consideration when calculating holiday pay. The focus was on whether voluntary overtime should be taken into account as part of an employee’s normal remuneration for the purposes of calculating holiday pay. In the case in question, the workers had voluntarily carried out additional duties over and above those detailed in their contract of employment.
The Employment Appeal Tribunal has held that discounting voluntary overtime which is undertaken on a regular basis when establishing holiday pay, is inconsistent with the principle which is clearly established in EU Law that ‘normal remuneration’ must be paid during annual leave.
It was argued that not taking voluntary overtime into consideration when calculating holiday pay, could possibly have an impact on the employee’s likelihood of taking annual leave. It was suggested that employees may be deterred from taking holidays, due to their concerns that they could end up being financially worse off.
The impact of the decision is that employees should no longer be any worse off financially for taking holidays and will hopefully be encouraged to take the annual leave they are entitled to.
What payments would be considered normal for the purpose of holiday pay and for the payment to even be considered as normal, must have been paid over a sufficient period of time. Normal pay in any individual situation will be a question of fact and degree and determined on a case by case basis whilst taking into account the circumstances of each case (Just Employment Law, 2017).
It can be challenging to determine holiday pay on an individual basis, taking into consideration what should be included in terms of overtime. At HR Services Scotland Ltd any of our HR team would be happy to assist you in the calculation of employee holiday pay entitlement and your voluntary overtime policy.
If we can help you with this or any other HR issue, please do not hesitate to contact a member of our HR Team at HR Services Scotland Ltd on 0800 652 2610.
For more information about the services that we provide at HR Services Scotland Ltd, please get in touch with us by contacting the above phone number or via the links below.