Overtime should count in holiday pay, landmark tribunal hearing rules

Millions of workers could now have their holiday pay recalculated to take into account overtime. Businesses are facing a multibillion-pound bill as a tribunal ruled today that overtime should be taken into account when holiday pay is calculated.

In a landmark case, the Employment Appeal Tribunal ruled that it is wrong for employers to only take into account basic pay when calculating how much an employee should be paid while they are on holiday.

The ruling added that workers can make backdated claims, but only if it is less than three months since their last holiday, or last incorrect payment.

“This will have huge repercussions for UK employers. Employers who pay only basic pay during holidays are selling employees short. Holiday pay is an issue that impacts every business and many employers now face a whole-sale rethink of how they pay their employees and calculate costs,” said Paul McFarlane, partner at Weightmans law firm.

Source: www.thetimes.co.uk

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