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Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 16 Aug 2018 | comments*Discuss
 
Holiday Pay Overtime Pay Statutory

The European Working Time Directive states that workers should receive four weeks statutory holiday pay. This was implemented in the UK by The Working Time Directive 1998. In 2009, the UK Government increased this allowance to 5.6 weeks annual statutory holiday pay.

This is a minimum statutory requirement, but employers can offer contractual holiday pay above this minimum level. Any additional holiday pay may however be subject to conditions such as length of employment or rank within the company. Public holidays do not have to be given as separate holidays, so you may receive less than 5.6 weeks time to book off work as vacation time in addition to bank holidays, but will be paid for bank holidays when the business is closed.

The exact number of days you receive will depend upon the number of days that you work. For example:
  • if you work 5 days a week, you will receive 5 x 5.6 = 28 days
  • if you work 2 and a half days a week, you will receive 2.5 x 5.6 = 14 days
There is a cap of 28 days, so if you work 6 days a week, you will still only receive 28 days statutory holiday pay.

Bear Scotland Ltd (et al) v Fulton

Your holiday pay is calculated, in accordance with The Employment Rights Act 1996, as the equivalent of a week's pay for each week of statutory leave. However the Act gives no real guidance about how your average week's pay should be calculated. This means that most companies will only pay your basic weekly salary as holiday pay, and not take into account any additional payments such as commission and voluntary overtime.

On 4 November 2014, The Employment Appeal Tribunal decided the case of Bear Scotland Ltd (et al) v Fulton. This case considered whether employers should take overtime payments into account when calculating statutory holiday pay.

The Tribunal ruled that additional payments such as voluntary overtime and payment for being on stand-by for emergency call outs should be taken into account when calculating statutory holiday pay.

Workers can make a back-dated claim for further holiday pay owed under the new calculation. However back-dated claims can only be made to The Employment Tribunal if it is less than 3 months since the last incorrect payment of holiday pay.

Good or bad judgement?

The Tribunal's judgement in Bear Scotland Ltd (et al) v Fulton has been celebrated by Workers Unions who estimate that 1/6 of UK workers will benefit from this new calculation with increased holiday pay.

Business groups such as The Federation of Small Businesses, The British Chambers of Commerce and The Institute of Directors have however expressed concerns as this re-calculation could create an increase of around 3% to the payroll bill of the members. This in turn could lead to an increased "squeeze" on small businesses, just as the UK economy was starting to turn around. Ultimately if businesses are unable to pay employees, that could lead to redundancies.

The estimated impact of the decision is very mixed, depending upon which groups you speak to. It seems likely that the re-calculation will in the short-term be of benefit to employees. However if smaller businesses are unable to adapt to the changes, the re-calculation could cause long-term problems. It is very early days, and some business groups have expressed an interest in appealing the decision, so it is a case of "watch this space" in terms of the impact of the judgement.

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Hi I have been working for my employer for 2 years. I’ve recently taken holiday and regularly work a 45 hr week in 5 days. I’ve only been paid for 28 hrs of my holiday not the 36 it should be. I’m told I haven’t earnt that entitlement. I’ve checked the staff handbook and it quotes. After the 1st year of employment you will be entitled to your full holiday entitlement without having to accrue your holiday rights. I have mentioned this to my boss and she said that I am able to take them but they don’t have to pay me for them. Is this correct? If so how is it possible for anyone to take a 2 week holiday in the summer?
David Renwick - 16-Aug-18 @ 5:08 PM
senga - Your Question:
My contract is 39hrs a week.i get 7 weeks holidays a year.holiday year run april to march I got paid off 7 july.i have only taken 34hrs holiday how much holiday pay should I recieve

Our Response:
Unless there are other factors you haven't told us about...
Your annual holiday entitlement is 7 weeks = 273 hours
From April to when you were paid off is 3 months which is approx .25 of your total annual entitlement which = 68.25
You've taken 34 hours of the 68.25 hours leave - that means you should be given about 34 hours of holiday pay in your final salary payment.
SafeWorkers - 14-Aug-18 @ 3:11 PM
James - Your Question:
Hi my girlfriends boss is disputing pay due to holiday. They are calculating her pay as a 47 week instead of 52 as she is entitled to 5 weeks holiday. Is this correct. Sounds as if they are calculating her salary less as they are paying her for less days when she should still be getting paid for the 5 weeks?

Our Response:
It doesn't sound correct, what does her contract say? There's not enough information here for comment.
SafeWorkers - 3-Aug-18 @ 12:37 PM
patters - Your Question:
I have a 16 hour contract get an average of 28 hours per week, just checked rota for coming week and I have 13 hours and 2 days holiday, this cant be right surely not

Our Response:
Have you booked the holiday? If so this counts as part of your contracted weekly hours - what do you think is not right about it? We're not sure what your question is?
SafeWorkers - 3-Aug-18 @ 10:15 AM
my contract is 39hrs a week..i get 7 weeks holidays a year.holiday year run april to march i got paid off 7 july..i have only taken 34hrs holidayhow much holiday pay should i recieve
senga - 2-Aug-18 @ 6:08 PM
Pam - Your Question:
I have worked for the same company for over 20 years , can they use an accrual system to calculate my holidays? I have just been told that I can’t take holidays until October as I have used my entitlement until then. Our holiday year runs from 01 April to 31 March each year

Our Response:
This will depend your contractual details. If you've been allowed to do this for the previous twenty years and your employer has suddenly changed prevented it,"custom and practice" might be relevant. You would need to seek advice from ACAS or an employment law professional to find out more about that.
SafeWorkers - 1-Aug-18 @ 10:40 AM
Hi my girlfriends boss is disputing pay due to holiday. They are calculating her pay as a 47 week instead of 52 as she is entitled to 5 weeks holiday. Is this correct. Sounds as if they are calculating her salary less as they are paying her for less days when she should still be getting paid for the 5 weeks?
James - 1-Aug-18 @ 10:35 AM
i have a 16 hour contract get an average of 28 hours per week, just checked rota for coming week and i have 13 hours and 2 days holiday, this cant be right surely not
patters - 31-Jul-18 @ 5:10 PM
Steve- Your Question:
I am currently working on a 5hr a week contract, but I work between 40 - 55 hours as overtime. My employer said I'm not entitled to any extra paid holidays for my overtime hours. Is this right or can I challenge them?

Our Response:
Your holiday pay should be based on your average pay over the previous 12 weeks. You are not entitled to extra holidays for overtime, you should re-negotiate your contract if you are working siginificantly more.
SafeWorkers - 31-Jul-18 @ 11:47 AM
I have worked for the same company for over 20 years , can they use an accrual system to calculate my holidays? I have just been told that I can’t take holidays until October as I have used my entitlement until then. Our holiday year runs from 01 April to 31 March each year
Pam - 31-Jul-18 @ 5:32 AM
I am currently working on a 5hr a week contract, but I work between 40 - 55 hours as overtime. My employer said I'm not entitled to any extra paid holidays for my overtime hours. Is this right or can I challenge them?
Steve - 30-Jul-18 @ 10:48 AM
Hi i work 40 hrs a week have been working since jan 2018, im entitled to 28 days holiday. The last weeks holiday i took was only paid 20hrs. Is that fair?
Dame - 20-Jul-18 @ 7:34 PM
Kimmy - Your Question:
Hi I have a 37.5 hour a week contract but work far more hours than that but my extra hours are paid at a lower rate than my contracted hours. I get 20 days AL plus Bank holidays am I entitled to more AL days ?

Our Response:
Your employer does not have to give you extra holidays because you do overtime. You do currently receive the legal requirement. Any holiday pay should reflect your average pay in the 12 weeks prior to the holiday.
SafeWorkers - 5-Jul-18 @ 2:30 PM
Hi I have a 37.5hour a week contract but work far more hours than that but my extra hours are paid at a lower rate than my contracted hours. I get 20 days AL plus Bank holidays am i entitled to more AL days ?
Kimmy - 2-Jul-18 @ 12:58 PM
Rick - Your Question:
I work 60 hours a week no over time after 40 hours when I hve a holiday in paid at 8 hour rate is that fair

Our Response:
Your holiday pay should be based on your average pay over the past 12 weeks. So if you are paid extra for overtime this should be reflected.
SafeWorkers - 29-Jun-18 @ 3:42 PM
I work 60 hours a week no over time after 40 hours when I hve a holiday in paid at 8 hour rate is that fair
Rick - 29-Jun-18 @ 5:01 AM
Kate - Your Question:
I have worked for the company for 4 years my contract is 35 hours but I was told at interview every I would have to do 46 hours which I do but my annual leave is always only paid at 35 hours am I entitled to claim back holiday pay

Our Response:
Yes, your holiday pay should be based on your average pay over the 12 weeks prior to your holiday. You should not be expected to work more hours than you're contracted to on a regular basis unless you do so voluntarily.
SafeWorkers - 27-Jun-18 @ 10:56 AM
I have worked for the company for 4 years my contract is 35 hours but I was told at interview everyI would have to do 46 hours which I do but my annual leave is always only paid at 35 hours am I entitled to claim back holiday pay
Kate - 26-Jun-18 @ 10:24 AM
dino17 - Your Question:
Hi, I am a shift worker and have been employed by the same company for the past 24 years.I get paid 37.5 hour week but I work 4 x 12 hour shifts.I regularly work random over time shifts, probably on average of 36 hours extra a month, I get paid time and a half for these shift.Because I work in the Chemical industry with continuous process we are told that 'The provisions of the Working Time Regulation do not apply to this sector of industry.'My question is, should I be gaining extra holidays for working these overtime shifts?Many thanksDino 17

Our Response:
No you don't get additional holidays for overtime. Your holiday pay should however, reflect your average pay over the 12 weeks prior to taking the leave.
SafeWorkers - 22-Jun-18 @ 10:31 AM
Hi, I am a shift worker and have been employed by the same company for the past 24 years. I get paid 37.5 hour week but I work 4 x 12 hour shifts. I regularly work random over time shifts, probably on average of 36 hours extra a month, I get paid time and a half for these shift. Because I work in the Chemical industry with continuous process we are told that 'The provisions of the Working Time Regulation do not apply to this sector of industry.' My question is, should I be gaining extra holidays for working these overtime shifts? Many thanks Dino 17
dino17 - 21-Jun-18 @ 1:23 AM
Hi I have now worked for my employer for coming up to 4 and a half years but still have to accure my holidays. I am a part time worker working 15 hrs a week. Is this correct that I still have to accure my holidays if I have not accrued enough when I take my holiday I have to wait till the end of the year to be paid for the days I took and never got paid for.
Sal - 20-Jun-18 @ 3:48 PM
Hello, my contracted hours is 21hours per week. In last fiscal year 2017 I worked 2050 hours (not including training hours nor sick leaves). My average weekly working hours was 39,4 hours per week (2050hours : 52weeks in a year). What is my holiday entitlement for the last fiscal 2017 year? Thank you for any advice.
SoGu - 4-Jun-18 @ 12:26 AM
Jgy - Your Question:
My contracted hours are 35 hours per week, yet my basic working week is 47 hours per week, my holiday pay is 35 hours per week if I have a week off, is this correct ?Also my holiday runs from March to April, I've been employed with this company for 18 months, I've booked 12 days annual leave in June and my manager told me I may not get paid for the whole 12 days, yet I am entitled to 28 days a year leave.Thankyou for any responses

Our Response:
Your holiday pay should be based on your average pay over the 12 weeks prior to your holiday. In terms of the holiday allowance,check your employer's policy on annual leave as many employers will only allow a maximum of two weeks holiday to be taken in one go (usually 10 days if you work five days per week).
SafeWorkers - 29-May-18 @ 3:10 PM
My contracted hours are 35 hours per week, yet my basic working week is 47 hours per week, my holiday pay is 35 hours per week if I have a week off, is this correct ?. Also my holiday runs from March to April, I've been employed with this company for 18 months, I've booked 12 days annual leave in June and my manager told me I may not get paid for the whole 12 days, yet I am entitled to 28 days a year leave. Thankyou for any responses
Jgy - 28-May-18 @ 4:29 PM
On 27 of march i asked my days of holliday because all year i didnt use all so i asked my p45 and my days of holliday as i decide to ho back in my country , the agency told me they dont know if i will still recive my days of holliday and i was waiting 2 weecks with bo answear and after two weecks they told me i cant take my days of holliday because is after april so the end of financial year passed , i had 10 days of holliday and no one informed me that i cannot take my holliday or at least the money , even on 27 of march even no advertisement before
Emar - 11-May-18 @ 7:02 AM
Im contracted to work 39 hours with 1 day guaranteed overtime if I want this off I have to give prior notice 7days in advance I iv been doing about 56 hours a week but when im holiday they only pay 39 hours and average pro rota leaving me about 70 pounds a week short if I average it over the past 12 weeks spoke to union they say its still ongoing with tribunalsis this correct
Adrian - 23-Apr-18 @ 1:46 PM
Lucy - Your Question:
I’m the same. My contract is 12hours per week. I never do less than 48 hours. I had 2 days holiday and was paid 4 hours per day. Is this right??

Our Response:
Unless the overtime is compulsory, you do not accrue extra holidays because you do overtime. If your work is such that you regularly do 48 hours per week, you should consider negotiating a new contract with accompanying holiday entitlement.
SafeWorkers - 18-Apr-18 @ 2:00 PM
I’m the same. My contract is 12hours per week. I never do less than 48 hours. I had 2 days holiday and was paid 4 hours per day. Is this right??
Lucy - 17-Apr-18 @ 11:36 AM
I have almost completed 20 years service for the same company.The last 6 years have been part time. I was never given a contract.I verbally agreed my working days would be Wednesday 1200-1815 and Sunday 1045-1715. When my son started school 3 years ago, I had to give up my Wednesday as the company would not adapt to my needs.I’ve since continued to work every Sunday! The company has since discovered there is no contract in place and is now suggesting I must be available to work any day of their choice.I must fill out a flexible working requestto work Sunday only, considering this is the only day I have worked for the last 3 years! There is no reason for me not to work Sunday as it is an undesirable day for most of the team to Work! What are my rights?I am on a higher rate to my peers, due to length of service and previous management role when I was full time.I feel they are using this against me! Thank you
Njp - 15-Apr-18 @ 11:14 PM
LisaJ - Your Question:
For the last 7 years I have done voluntary overtime. For the past 4 years I have regularly woked on average 15 hours per week overtime. When taking annual leave I am always financially worse off. It deters me taking leave and have to save up to taje time off. Should be be getting holiday pay? Also can I request a backdate and if so what is maximum backdate period? Thanks in advance

Our Response:
As per the article
"The Tribunal ruled that additional payments such as voluntary overtime and payment for being on stand-by for emergency call outs should be taken into account when calculating statutory holiday pay.

Workers can make a back-dated claim for further holiday pay owed under the new calculation. However back-dated claims can only be made to The Employment Tribunal if it is less than 3 months since the last incorrect payment of holiday pay."
SafeWorkers - 10-Apr-18 @ 3:11 PM
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