How do you calculate holiday pay?

  1. Holiday Pay

A recent tribunal decision held that EU law requires that holiday pay should be calculated not only on the basis of their salary, but should also include an element of remuneration “intrinsically linked” to their contract, including overtime, even when neither guaranteed nor compulsory.

Is this another setback for employers? Not only does this potentially increase the costs of holiday pay considerably, it also exposes employers to the risk of claims for unlawful deductions from wages.

What should you do now? Nothing at the moment.  The tribunal decision is being appealed by the employer so you should await the final outcome before implementing any major changes.  We will keep you posted.

But you can prepare or at least review what you do now?  How is overtime granted? How is overtime recorded?  How accurate are your records? How would you defend a claim? Take a look at contracts for new joiners and reflect on the bigger picture. If you do receive a claim for holiday pay, be aware of the ramifications.  Preparation is key.  Take a good look at your contracts.  When were these last reviewed?

For any further advice please give us a ring on 01994 240 631

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