Every little helps
Inclusion of overtime in calculation of holiday pay has its limits
On 4 November 2014 the Employment
Appeal Tribunal (EAT) caused quite
a stir when it handed down its
judgment in Bear Scotland v Fulton
(and conjoined cases).
In that case the key points of note were
as follows:
1. Workers are entitled to be paid monies
to reflect normal non-guaranteed
overtime as part of their holiday pay.
This is because holiday pay should
be calculated on the basis of what
is normal pay. Normal pay is what is
normally received for what a worker is
required to carry out in their job role.
practicability test so an extension may
be allowed in limited circumstances.
4. Finally, taxable remuneration for time
spent travelling to work (travelling
time payment and radius allowance)
should also be reflected when
calculating holiday pay.
This means that all people working
voluntary overtime could claim for
additional holiday pay. Previously, only
basic pay counted when calculating
holiday pay.
2. Domestic legislation could be
interpreted to provide for this result.
This does however, only apply to
the basic four weeks’ leave granted
under the EU Working Time Directive,
not the additional 1.6 weeks under
regulation 13A of the Working Time
Regulations, the domestic legislation
that reflect the EU directive.
The EAT refused to grant a reference
to the Court of Justice of the European
Union, but did give permission for an
appeal to be made to the Court of Appeal.
They stated that the third point listed
above was the most important issue for
the Court of Appeal to consider. Given
the substantial financial implication for
companies in possible back dated claims,
an appeal appeared likely. However, the
union Unite has now said it will not be
making an appeal on this issue.
3. Claims for arrears of holiday pay will
be out of time if there has been a
gap of over three months between
successive underpayments. This
is subject to the usual reasonable
Unite have said that it was not their
intention to bankrupt business with
back dated claims. Instead they were
looking at ensuring workers are paid
their fair share going forward. Part of this
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process, as the union sees it, is working
with employers to ensure they get their
house in order.
The government estimates that onesixth of the 30.8 million people in
work get paid overtime, meaning that
approximately five million workers could
be entitled to more holiday pay. That is a
lot of houses to get in order.
Working arrangements will have to be
assessed in order to decide what is and
is not regularly worked non-guaranteed
overtime and what allowances are more
than mere expenses. A judgment will
have to be made on what qualifies as
regular work which can be properly
related to normal pay. Where a pattern
of work is fairly settled then the task is
made easier.
The government responded to the EAT
judgement by setting up a taskforce
to look at the issues raised by it. Unite
has made known its upset about unions
being excluded from it. What ideas the
taskforce comes up with remains to be
seen. In the meanwhile welcome to the
new normal, even though it may lack a
bit of definition.
By Martin Williams