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Holiday pay – voluntary overtime

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Hooray, the summer has finally arrived (for the moment at least), and lots of employees are jetting off to enjoy their summer holidays. It seems the Tribunals still have holidays and holiday pay on the brain too…

Whilst, employees are off sunning themselves in some tropical paradise, employers are left with the somewhat tricky task of trying to figure out exactly what they need to pay these employees whilst they’re off.

Holiday pay – what’s in and what’s out?

As you will no doubt know, there have been some MASSIVE changes surrounding holiday pay over the past year or so… Click here to read my original holiday pay update for the lowdown.

It’s no longer a case of simply paying the employee their standard wage for the time they are off.

Now, employers should be looking to pay an employee’s ‘normal remuneration’ whilst they are on holiday. This can include compulsory and non-guaranteed overtime and commission. This is to make sure that an employee doesn’t ‘miss out’ financially whilst they are on holiday.

We can see the idea behind it – employees shouldn’t be put off from taking their holiday through fear that they will not earn the same as if they were at work… BUT, equally, employers need to know exactly what they need to include in the calculation!

Another change?

Yes, you heard us correctly, there may now be yet another (potential) addition into what should be included when calculating holiday pay.

This time it’s the turn of voluntary overtime i.e. overtime that an employer does not have to provide and the employee doesn’t have to work.

A very recent case, heard in the Court of Appeal in Northern Ireland, said that voluntary overtime MAY need to be included when calculating holiday pay.

So, what’s next?

The Court of Appeal did not give any guidance about when voluntary overtime should or should not be included in the calculation. Instead they said that each case should be looked at on a case by case basis. I’m sure you’ll agree that this is not the most helpful guidance ever!

This case is going to go back to the Employment Tribunal for them to have another look at it. So, we have got to wait and see what happens… For now, it’s safe to say don’t automatically discard voluntary overtime; it may need introducing in your holiday pay calculation.

And so, the holiday pay saga rumbles on. we are sure that this certainly won’t be the last that we hear about holiday pay…

If you would like any further advice on this topic or any other aspect of employment law, please do contact the team.

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