Q&A - Does holiday pay have to take account of non-guaranteed overtime?

02/02/2015

Q: I employ several staff who travel with their jobs and have come to expect non-guaranteed overtime to cover travel time. I recently read that non-guaranteed overtime will have to be included in calculations of holiday pay in future. Is this correct?

A: The Employment Appeal Tribunal (EAT) ruled in the autumn of 2014 that, with immediate effect, non-guaranteed overtime and other supplemental payments relating to travel should be included in holiday pay calculations.  The ruling only applied to holiday pay in respect of the 20 days entitlement mandated by the Working Time Directive (WTD), not to any of the 8 ‘additional leave’ days in the Working Time Regulations (WTR) provisions.

The additional days are the last 8 days to be agreed by the employer and employee in that leave year. When making this ruling the EAT also restricted how far back holiday pay claims could go but this has, to an extent, been overtaken by the Government introducing legislation preventing claims issued after 30 June 2015 from going back more than two years.

The important thing going forward is for you as an employer to assess any potential liabilities you may have in respect of unpaid holiday pay claims, especially if you have employees with potentially significant long-term back pay claims that might be presented in the civil courts, and take whatever practical steps are needed to mitigate them.

Due to the complexities of employment law you may benefit from legal advice tailored to your specific needs. If you do make an appointment to see an employment lawyer this could also be a good time to review and fully update all your employee contracts. 

Robert Williams

Robert Williams

Partner

A Partner and Head of the Civil Litigation, Personal Injury and Dispute Resolution team in Wrexham