Yesterday, the Employment Appeal Tribunal ruled that overtime should count towards an employee’s holiday pay. This could see up to 5 million employees claiming back holiday pay!
In August, Kubo blogged about the differences in annual leave across the world and discovered that it varies greatly from country to country. More surprisingly, America had no official rule on holiday and it was down to the individual companies Annual Leave policy.In the UK, it is a minimum requirement that a worker receives 5.6 weeks annual leave, so with an average working week of 5 days, that is 28 days a year (which can include bank holidays). Workers that are required to work overtime as a regular part of their job argue that they should receive extra holiday pay for the overtime time worked.
The ruling may be referred to the Court of Appeal, which means it could be years until a final decision is made. The firms involved in yesterday’s judgement have been given permission to appeal the decision at the Court of Appeal. When asked if they are going to appeal a spokesman for the firms said they are "considering their options".
What was the tribunal about?
Yesterday’s ruling followed an appeal by Bear Scotland, a road construction and maintenance firm, against an earlier decision by an employment tribunal. The tribunal found Bear Scotland had made unauthorised deductions from the wages of two employees, David Fulton and Douglas Baxter, by failing to include overtime and other payments associated with their work in calculating the holiday pay they were entitled to.
Two separate companies, Hertel and Amec, also appealed a decision stating they had made unauthorised deductions from wages of employees working on a construction site at West Burton in England, by failing to include overtime when calculating holiday pay. As the cases raised the same issues, they were heard together at the Employment Appeals Tribunal.
All three cases centred on the right to paid holiday under the Working Time Regulations 1998, now the Working Time Directive 2003, which states: "A worker is entitled to be paid in respect of any period of annual leave to which he is entitled, at the rate of a week's pay in respect of each week of leave."
Back dated claims
There were concerns that the business sector could be crippled by pay outs on back dated claims from employees. As a result, backdated claims have been limited. The tribunal ruled that employees cannot claim more than three months after the last incorrect payment. This still means that businesses could suffer a real blow and potential job losses could occur as a result, as 23% of men and 12% of women working full time regularly work overtime.
Kate Hodgkiss, partner at DLA Piper Scotland LLP, which represented the firms said, “Those carrying out non-guaranteed overtime, which is offered by an employer on a contractual basis, are more likely to have an entitlement claim as they could argue this is normal remuneration. However, those who perform overtime on an ad hoc basis are under no obligation to do this, meaning it's not part of the normal remuneration package, therefore, they're less likely to have an entitlement to claim."
What do you think? If your job requires you to work beyond your contracted hours should this be taken into consideration when your holiday pay is calculated? After all, if you take holiday on a day where you would normally work overtime, you would lose out on the overtime pay for that day, if it is not included in your holiday pay. Or do you think that you should see overtime as a bonus and not as part of your basic pay?
Kubo would love to hear your thoughts on this, so get in touch!
No comments:
Post a Comment