EMPLOYMENT NEWS ALERT – Overtime must be taken into account when holiday pay is calculated.

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Posted in:HR and Employment|November 4, 2014 | Join the mailing list


The Employment Appeal Tribunal (EAT) has today issued its judgment in the case of
Bear Scotland v Fulton (and two other cases which were considered at the same time) and has made the important ruling that when employers are calculating
holiday pay for their workers, that pay needs to take into account normal overtime pay, rather than being based solely on the workers’ basic pay.

The EAT also said, however, that this overtime pay requirement only applies to the basic 4 weeks’ leave provided for in the Working Time Regulations 1998 and does not therefore apply to the additional 1.6 weeks’ leave entitlement, which was introduced into
those Regulations in 2007.

Also, and importantly, the EAT decided that workers who have been underpaid holiday pay because their holiday pay was calculated on basic wages only, cannot necessarily bring backdated claims for years of underpayment. The EAT said that if at any time there
has been a gap of more than three months between any periods of underpaid holiday, then that gap can “break the chain” meaning that no claim can be made in respect of any period of holiday which pre-dated that gap.

The EAT’s judgment is detailed and lengthy and needs to be considered carefully and as a whole and the Government has today announced that a taskforce is being set up to do just that. The judgment is also unlikely to be the final word on this matter, because
while the EAT refused to refer the cases to the Court of Justice of the European Union, it did give permission for its judgment to be appealed to our own country’s Court of Appeal.

For more information about any of the above or for practical commercial advice on this or any other aspect of employment law, please contact
Nigel Crebbin of the Berg Employment Team on 0161 833 9211 or email him at
nigelc@berg.co.uk.

Follow us on Twitter: @Berg_HR

(The information and opinions contained in this news alert are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this news alert.)

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