November 5, 2014

Holiday Pay Ruling May Cause Fireworks

Depending on your point of view, yesterday's EAT ruling on whether overtime should be included in holiday pay will be still be raising a few questions.

It has been clarified that, going forward, overtime payments should be included in calculations for a week's pay - the amount that should be used when paying holiday pay, however, the fear for employers was that employees may be able to claim back pay for what effectively was a deduction from pay, if holiday pay was paid at a basic rate.

The ruling has concluded that where a break of three months has elapsed between unlawful deductions i.e. a period of three months where no holiday has been taken or it was paid at the correct rate, then there can be no claim for payments before this period.

This will probably be a big sigh of relief for employers, as most employees, historically, will not have had holidays on such a regular basis so a three month gap may be the norm.

However, whatever your view, it is likely that the decision by the EAT will be appealed to the European Court of Justice, and changes may be made.

Watch this space


For the CIPD point of view click here

Tags: holiday pay

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