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Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 17 Apr 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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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
Anj - Your Question:
I have a contract for 17.5 hrs a week and days stated were Wed Thurs Fri , I have been told these are to change to Mon Thurs Fri. I have advised I am unable to work on a Monday as I have prior commitments , I look after my friends little girl and take her to nursery.I have BN told I need to do this. I have worked here for 2 years. Can they do this!

Our Response:
If your contract actually specifies the days to be Wed, Thurs and Friday, your employer cannot change this without your consent. Please read our guide to objecting to changes in your contract for more help.
SafeWorkers - 10-Apr-18 @ 12:19 PM
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
LisaJ - 9-Apr-18 @ 11:08 PM
I have a contract for 17.5 hrs a week and days stated were Wed Thurs Fri , I have been told these are to change to Mon Thurs Fri. I have advised I am unable to work on a Monday as I have prior commitments , I look after my friends little girl and take her to nursery. I have BN told I need to do this. I have worked here for 2 years. Can they do this!
Anj - 9-Apr-18 @ 4:04 PM
Zsazsa - Your Question:
I have recently been given a contract in a primary school for termtime+2 weeks (37.5 per week) pay has been worked out pro-rata but I have been told I will not be entitled to any holiday entitlement with this contract, is this correct? My mother works at a University on a similar termtime contract (41 weeks) however she gets 23 days(her full time colleagues get 30).

Our Response:
Without seeing the contract we can't really help. But ingeneral employees working on a term time only basis are not allowed to take,annual leave entitlement during terms time. Your hourly rate of paytakes account of this entitlement. Different employers treat this differently, you should ask an employment professional to look at your contrct if you're unsure. Here's what UNISON says
SafeWorkers - 3-Apr-18 @ 11:21 AM
I have recently been given a contract in a primary school for termtime+2 weeks (37.5 per week) pay has been worked out pro-rata but I have been told I will not be entitled to any holiday entitlement with this contract, is this correct? My mother works at a University on a similar termtime contract (41 weeks) however she gets 23 days(her full time colleagues get 30).
Zsazsa - 30-Mar-18 @ 8:27 AM
I work for a privately owned agency and we are monitored by all government of Canada . We incorporate businesses. I was told because Govt offices are closed we will be closed and therefore not paid on Good Friday. I am not sure if this is allowed as the province I work in is Alberta and we are supposed to get paid for days off that aren’t our fault. Please advise Thanks
Vee - 29-Mar-18 @ 12:29 AM
Liddle - Your Question:
Hi I work 40 hrs a week a.I've been with the company for 5 years. I used to get time and half for any overtime I did. Then last year the told me I was not intitled for it and stopped it.but the cleaners get the same money as me and they get time and half.

Our Response:
We assume this is a company policy that can be changed but check your contract of employment. If it says you must work overtime and it will be paid at time and half, then your employer must honour this. If it's not detailed in your contract and is not compulsory, then there's not much you can do about it really.
SafeWorkers - 27-Mar-18 @ 12:07 PM
I currently work four twelve hour days with four days off then four twelve hour nights with four days off, because of my role I am paid the full twelve hours yet when I take one of my 28 days annual leave I am only entitled to 8.4 hours pay why? It has been like this for the last seven years, also I do on average 20 days overtime a year and again have done so but none if this is taken into account, is this correct?
Tony - 24-Mar-18 @ 8:59 PM
Hi I work 40 hrs a week a.I've been with the company for 5 years. I used to get time and half for any overtime I did. Then last year the told me I was not intitled for it and stopped it.but the cleaners get the same money as me and they get time and half.
Liddle - 24-Mar-18 @ 2:17 PM
Hi I’ve been working for the same company for nearly a year now I am contracted to work. 32 hours a week over 4 days so I asked my boss last week about my holidays for this year she said I was only entitled to 16 days a year and I have to work all bank hollidays to get any extra days above the 16 I looked on the governments website they said I was entitled to more than 16 and that can include bank holidays so if I have to work bank Holliday said should I not get extra pay or a extra Holliday ?
Nicb34 - 21-Mar-18 @ 4:37 PM
Slic - Your Question:
Hi,I receive a basic salary and offshore allowance. Can anyone advise whether offshore allowance should form part of the calculation related to variable holiday pay owed? I can't seem to find this written anywhere.

Our Response:
We really don't know...the whole holiday pay is not definitive and off shore workers' allowance is of coursedifferent to overtime. Do you have a union? The RMT offshore energy branch might have an update on this if you contact them
SafeWorkers - 19-Mar-18 @ 2:31 PM
Hi, I receive a basic salary and offshore allowance. Can anyone advise whether offshore allowance should form part of the calculation related to variable holiday pay owed? I can't seem to find this written anywhere.
Slic - 16-Mar-18 @ 9:02 PM
Hi. My employer have failed to pay overtime related holiday pay. It has only recently come to light. Although my contract says 25 days, I understand that legally, the company are only obliged to take into consideration 20 days which they class as statutory and the additional 5 classed as enhanced. Also legally, the company are only obliged to backdate 2 years. The company are now proposing they backdate only 18 months, not 24 and are introducing a cap at £1000 so regardless of how much you are actually owed or entitled to, the maximum payment is capped at £1000. Is this legal? My point being, if an individual is owed £1000 over an 18 month period, they will receive 100% of what they are entitled to however this would be more should they backdate 24 months. But if an employee is owed £2000 over the same 18 month period, by imposing a cap at £1000, that employee would only receive 50% of their entitlement which is the case we are facing and surely amounts to discrimination?
Scottie - 12-Mar-18 @ 5:43 PM
Hi i was on ssp in January and went back to work with a back to work note from my consultant on a Tuesday. My over time for january is paid in February and i have been docked my first week back to work overtime. Can they do this please
Stevo - 5-Mar-18 @ 5:10 PM
Dave1972 - Your Question:
Hi after recent ruling for volunteer overtime to be calculated in the holiday pay. Is there a time limit as this ruling was only done 31 July 2017. As I only found out in December and the company tells me that I’m out of time.Many thanks

Our Response:
Sorry your question is not clear? When did you take the holiday?
SafeWorkers - 20-Feb-18 @ 3:30 PM
Lozza - Your Question:
Hi I've had to take some emergency holidays due to health issues. My employer has told me that it will be calculated on the last three weeks due to us being in a new year? I have been with the company for over a year. My understanding was this should be calculated over the last twelve weeks. Please could you Clarify for me.

Our Response:
You haven't told us whether you work shifts, or have worked overtime etc so it's difficult to advise on this. Yes it is generally calculated on the previous 12 weeks in those instances. Note also that as ACAS explains: "the principle only applies to the 4 weeks of annual leave required by the EU Working Time Directive. All workers also receive a further 1.6 weeks of annual leave required by UK law, and some receive additional amounts as a part of their contracts too. Many employers choose to apply the judgments to this extra annual leave. Doing this is not a legal requirement but can help to keep their processes simple and understandable."
It's worth calling ACAS with details of your own situation.
SafeWorkers - 19-Feb-18 @ 11:52 AM
Hi I've had to take some emergency holidays due to health issues. My employer has told me that it will be calculated on the last three weeks due to us being in a new year? I have been with the company for over a year. My understanding was this should be calculated over the last twelve weeks. Please could you Clarify for me.
Lozza - 18-Feb-18 @ 3:02 PM
Hi after recent ruling for volunteer overtime to be calculated in the holiday pay. Is there a time limit as this ruling was only done 31 July 2017. As I only found out in December and the company tells me that I’m out of time. Many thanks
Dave1972 - 16-Feb-18 @ 9:18 PM
Hi, Our daughter has worked in a pub for two years but none of the staff are paid holiday pay, any holiday time taken is unpaid which we understand now, after looking it up, is illegal but she’s too scared to question it in case she loses her job. She was told on starting that she would be on a zero hours contract, but in actuality she has always had regular days/shifts. The zero hours contract was used, when she started, to justify them not paying holiday pay. They also don’t get rest breaks and she regularly works an 8 to 9 hour shift without a break or even a sit down. She took one weeks holiday last year unpaid. She’s currently 20 weeks pregnant; she was terrified to tell them initially but her employers have been ok about her maternity pay/leave so far. She did ask them if they would alter her shifts a little (as she was getting very tired working into the early hours of the morning without a break, often from 5.00pm until 1.00am), maybe to the occasional day shift instead, but was told this couldn’t be done and that ‘you knew what the shifts would be before you joined’ 2 years ago. She’s started taking a chair behind the bar and sitting down for a few minutes when it’s quiet, which isn’t often. Her maternity pay will be worked out from her working hours from the beginning of January to the beginning of March, unfortunately during this time, as it has been quieter after Christmas, her hours have been cut but she should just about qualify for maternity pay. She had booked a days holiday for during this time but as her holiday is unpaid then this won’t count towards her maternity pay which will mean the amount she gets will be less. She and her husband have recently bought a house of their own so have a mortgage and bills to pay but they manage well considering they are both on a low wage, we help them out as much as we can. I’m not really asking for advice as I understand the ball is in her court but have found out that this type of problem is widespread in the hospitality industry and think more should be done to force these employers to pay their employees what is legally their right! Maybe writing this might encourage others to be braver than she is (as she’s pregnant she’s feeling more anxiety than usual) and to fight for what is legally theirs. If more people refused to accept this sort of thing in the hospitality industry then these employers wouldn’t be able to get away with it.
concernedmum - 22-Jan-18 @ 1:50 PM
Gibbo - Your Question:
I've just been told today that if I work overtime and I book a days holiday at the end of that week my overtime hours will go towards fulfilling my contracted hours before my holiday pay will be added to my wages therefore if I worked 12 hours overtime I would actually only receive 4 and a half hours ot pay. Before today it wouldn't have been done that way as you have earned your holidays through the year ( so a paid holiday using work hours ) and your full hours of overtime. So my question is has there been a change in the law from government that enforces employers to penalise workers this way ?

Our Response:
It doesn't sound correct to us - your annual leave entitlement is a separate entity. Your holiday pay should however, be based on your average wage/salary in the 12 weeks prior to your taking the holiday. Perhaps they are confusing this rule with something else?
SafeWorkers - 19-Jan-18 @ 3:23 PM
I've just been told today that if I work overtime and I book a days holiday at the end of that week my overtime hours will go towards fulfilling my contracted hours before my holiday pay will be added to my wages therefore if I worked 12 hours overtime I would actually only receive 4 and a half hours ot pay . Before today it wouldn't have been done that way as you have earned your holidays through the year ( so a paid holiday using work hours ) and your full hours of overtime.So my question is has there been a change in the law from government that enforces employersto penaliseworkers this way ?
Gibbo - 18-Jan-18 @ 8:03 PM
nozmo - Your Question:
I have had a contract for 15hrs p/w for the last 11 years, but have been working 37.5hrs p/w for the last 4.5 years of my employment. my guaranteed days of work are sat & sun and I work what is required by the service for the rest of the week this is normally 22.5hrs.my holiday entitlement currently is 11 days pro-rata. I have asked my dept managers & HR numerous times if I am entitled to the full holiday entitlement and they are adamant that I am only due my contracted holidays 11 days.should I be getting more holiday days? and how far back can I claim for holiday pay?i have worked full time hours for so long so surely I have earned the holiday days?

Our Response:
You should be pushing for a new contract if you've consistently worked triple your currently contracted hours. Your holiday pay should reflect your average pay for the 12 weeks leading up to your holiday.
SafeWorkers - 9-Jan-18 @ 3:20 PM
i have had a contract for 15hrs p/w for the last 11 years, but have been working 37.5hrs p/w for the last 4.5 years of my employment. my guaranteed days of work are sat & sun and i work what is required by the service for the rest of the week this is normally 22.5hrs. my holiday entitlement currently is 11 days pro-rata. i have asked my dept managers & HR numerous times if i am entitled to the full holiday entitlement and they are adamant that i am only due my contracted holidays 11 days. should i be getting more holiday days? and how far back can i claim for holiday pay? i have worked full time hours for so long so surely i have earned the holiday days?
nozmo - 8-Jan-18 @ 9:43 PM
Hi I have a 4hr contract but work a lot more usually between 20 and 30 hrs a week. I have got a week holiday coming up. The company says I will only get paid for 4hrs for my holiday pay. I havnt been with the company long only around 4 months. Am I entitled to more than the 4hrs pay. ( I havnt received my contract yet) thank you
Jojo - 4-Jan-18 @ 10:23 PM
I was working around 49 to 56 hours per week on this company with loads of double shifts, even though i had a contract of 35 hours and they told me that I had to work, cause i was obligate to cover all the week scheldule, i didn't had the choice to say no, if i did i would get fired, is that legal? I left the company i September And in the end they didn't pay me my holiday payment. Is that legal?
Hankmoody13 - 18-Dec-17 @ 1:03 PM
Kazza - Your Question:
Hi, I am contracted to work 20 to 25 hours a week and get paid holidays, but due to shortage in staff I have had my leave cancelled I am still due approx 54 hours. I have been told I cannot carry these hours over and will loose them. As it's not my fault am I not entitled to these holidays by either taking the holidays or in cash

Our Response:
Your employer must let you take your statutory leave before the end of the leave year.Any additional holidays above the statutory level can be paid instead of taken but if your employer will neither pay you nor allow you to take the leave, then you could take action for breach of contract.
SafeWorkers - 13-Dec-17 @ 2:29 PM
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