Home > Employment Law > Holiday Pay & Overtime: The Changes

Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 9 Nov 2017 | 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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I was contracted as office staff with an entitlement of 28 holiday days. However I worked over 700 hours overtime this year. I have left my employment now and the company deducted overpaid holidays based on the 28 days but didn’t take into account the overtime. Should I be entitled to anymore holiday pay?
Sonia - 9-Nov-17 @ 8:11 PM
Dpk - Your Question:
Hi I am on a 22 hr per wk contract but work more hrs each week !! I have 2 payroll numbers 1 for my 22 hr post Ant the other is a banking payroll number for all hrs worked above my contract even though it’s the same job !! When getting annual leave pay it’s only ever my basic 22 hrs pay ! Should this pay not be calculated over a period of 12 was average pay of the hrs I have worked ??

Our Response:
Yes your holiday pay should be based on your average earnings over the 12 weeks prior to taking the holiday.
SafeWorkers - 6-Nov-17 @ 12:49 PM
Hi I am on a 22 hr per wk contract but work more hrs each week !! I have 2 payroll numbers 1 for my 22 hr post Ant the other is a banking payroll number for all hrs worked above my contract even though it’s the same job !! When getting annual leave pay it’s only ever my basic 22 hrs pay ! Should this pay not be calculated over a period of 12 was average pay of the hrs I have worked ??
Dpk - 4-Nov-17 @ 7:31 PM
James - Your Question:
I work 12 hour shifts as part of a 24/7 operation and do overtime regularly. When the company calculate your holiday pay rate, you say we should get average pay over last 12 weeks. If I book a week off should it be calculated as an average hourly rate for all hours worked in that period or do we have an argument to recieve the average weekly amount earned over last 12 week period. As these amounts we could get are very far apart

Our Response:
It should be based on your average salary over the previous 12 weeks
SafeWorkers - 29-Sep-17 @ 3:34 PM
I work 12 hour shifts as part of a 24/7 operation and do overtime regularly. When the company calculate your holiday pay rate, you say we should get average pay over last 12 weeks. If I book a week off should it be calculated as an average hourly rate for all hours worked in that period or do we have an argument to recieve the average weekly amount earned over last 12 week period. As these amounts we could get are very far apart
James - 28-Sep-17 @ 7:50 PM
Simon - Your Question:
I work a fair amount of overtime with the company I'm employed by, it's shift work, 12 hours, overtime can be at time and a half and or double time. My question is, I've done a total of 311 hours overtime this year, am I entitled to accrued annual leave for overtime done?

Our Response:
No, you don't get extra annual leave for overtime worked. Your holiday pay, should take overtime into account though, e.g. the amount of pay you receive when you take annual leave should be based on your average pay in the 17 weeks prior to your holiday.
SafeWorkers - 8-Sep-17 @ 2:00 PM
I work a fair amount of overtime with the company I'm employed by, it's shift work, 12 hours, overtime can be at time and a half and or double time. My question is, I've done a total of 311 hours overtime this year, am I entitled to accrued annual leave for overtime done?
Simon - 7-Sep-17 @ 10:26 PM
On a bank holiday week, should I get paid overtime rate after 32 hours if my contracted hours are 40,(so 32 would be 40 with bank holiday included)
Noz - 12-May-17 @ 4:31 PM
I am contracted to 16 hours per week but always work 28-32 hours per week, should my holiday pay be worked out using the actual hours worked on on my basic 16 hours?
Di - 24-Apr-17 @ 6:15 PM
Kelly36 - Your Question:
Hi just wondered if someone can help, I started work 2/11/16 and still employed I work 7 days a week and average at least 30 hours (zero hour contract) and I booked two day holiday on 15th and 16th April, but my manager said I won't be paid for them as Ive not been with the company for six months! Is this right?

Our Response:
Check details of your contract. Some companies do not allow employees to take any of their annual leave until after they've worked for a certain period of time. AS it's a zero hours contract there may be other factors involved. Contact ACAS for individual help.
SafeWorkers - 20-Apr-17 @ 1:45 PM
Hi just wondered if someone can help, I started work 2/11/16 and still employed I work 7 days a week and average at least 30 hours (zero hour contract) and I booked two day holiday on 15th and 16th April, but my manager said I won't be paid for them as Ive not been with the company for six months! Is this right?
Kelly36 - 17-Apr-17 @ 10:56 PM
Shellf - Your Question:
My company is changing to fortnightly pay for 2 months then on to monthly. How does the holiday pay work? For example: the first fortnightly pay falls on the 14th April, I finish for a weeks holiday on the 15th, would I get paid my holiday pay on the 14th or will I have to wait till the next pay. I would normally get my weeks wage and a weeks average holiday pay when I stop.

Our Response:
You would wait until the next pay day unless your employer has put an alternative in place. It would be easier to check this with your own HR department.
SafeWorkers - 31-Mar-17 @ 12:31 PM
My company is changing to fortnightly pay for 2 months then on to monthly. How does the holiday pay work? For example: the first fortnightly pay falls on the 14th April, I finish for a weeks holiday on the 15th, would I get paid my holiday pay on the 14th or will I have to wait till the next pay. I would normally get my weeks wage and a weeks average holiday pay when I stop.
Shellf - 30-Mar-17 @ 5:41 PM
Hi if my contract hours are 20 hrs a week and I only get 11 does my employer have to still pay me the full 20 hrs? Thanks.
Emzy - 13-Mar-17 @ 5:52 PM
maxter - Your Question:
Working in security - holiday pay always paid at 12 hours paid at site rate - now being told it is calculated on past 13 weeks shifts due to new legislation - this now works out at less than 12 hours and less than pay rate. Is this correct as I haven't been notified of this change. I transferred under tupe when old company was taken over.Regards.

Our Response:
Yes this is how holiday pay should be calculated: your average pay over the past 3 months. If your original contract states something different then of course your employer should honour this.
SafeWorkers - 13-Mar-17 @ 12:03 PM
Working in security - holiday pay always paid at 12 hours paid at site rate - now being told it is calculated on past 13 weeks shifts due to new legislation - this now works out at less than 12 hours and less than pay rate. Is this correct as i haven't been notified of this change. I transferred under tupe when old company was taken over. Regards.
maxter - 10-Mar-17 @ 2:17 PM
ranks - Your Question:
I have worked on a zero hours contract for 3 and a half years my employer has now shut down the company we was payed on a day rate, I am now being told there is no more work and that I not owed any holiday money I have all my wage slips to prove the days I have worked and once my days are calculated I should then from the total days work recieve holiday pay for this period is that correct

Our Response:
If you did not take any allocated holiday, then yes generally your pay should include that. Without knowing the full details of the contract, the hours you've worked and the holidays you've taken, we can't really comment though. It might be easier to take the information to Citzens's Advice or phone ACAS
SafeWorkers - 24-Feb-17 @ 10:06 AM
I have worked on a zero hours contract for 3 and a half years my employer has now shut down the company we was payed on a day rate, i am now being told there is no more work and that i not owed any holiday money i have all my wage slips to prove the days i have worked and once my days are calculated i should then from the total days work recieve holiday pay for this period is that correct
ranks - 21-Feb-17 @ 7:28 AM
Hi I'm entitled to 4 weeks holiday can I take a week holiday and work and get paid aswell
Caz - 17-Feb-17 @ 7:49 AM
Hi, my husband works shifts, and has recently taken 2 weeks with 2 days holiday per week. Week one he received holiday pay for approx. 25% less than his normal wage for 2 days. week 2 he received approx. 25% less than what he would normally get for 1 shift. obviously week 2 they have made an error in the number of holiday days, but overall the maths doesn't add up- why should he get paid less for taking holiday. I queried this with his payroll via email, and found that they calculate the holiday pay by taking the last 12 weeks average per week, then divide it by 5 to get a daily value. This works great if you work 5 days a week at 8 hours, however my husband works a rota of various 12 hour shifts and would never actually work 5 days. is there any way he should be back paid to cover the actual hours he has taken holiday rather than their version of 'a day'. This could work for others in the opposite light, that if they worked various shifts and took a 4 hour day shift they would get 20% of their average weekly earnings for that shift which could be part of a 40 hour week?
joanne - 26-Nov-16 @ 7:47 PM
Stephanie - Your Question:
I have been working for the company I work for, for 2 and a half years and my contract states "Your holiday entitlement will be calculated in hours based on the following calculation: number of hours worked / 100 x 12.07 = number of hours of accrued holiday" and from the 1st April 2016 to 30th Sept 2016 I would've worked 256. So 256 / 100 x 12.07 = 30.8992, and I've only taken 27 days but they've told my they're not paying me the last 2 days holiday I've taken which surely I'm entitled to? I have emailed them about this and this was the response I've received: "The method she has used is correct, however the calculation is done on the amount earned (their gross pay) rather than the number of hours worked. So she may have only 27 holiday days but because she has done additional hours she receives a higher pay for those days. This is what we do for everyone. If we used the below method she would have more holiday days but her pay would have been lower." But surely they can't change what my contract says?

Our Response:
It would be worth getting a professional to take a look at your contract and investigating it further on an individual basis. ACAS is a good place to start.
SafeWorkers - 13-Oct-16 @ 11:08 AM
I have been working for the company I work for, for 2 and a half years and my contract states "Your holiday entitlement will be calculated in hours based on the following calculation: number of hours worked / 100 x 12.07 = number of hours of accrued holiday" and from the 1st April 2016 to 30th Sept 2016 I would've worked 256. So 256 / 100 x 12.07 = 30.8992, and I've only taken 27 days but they've told my they're not paying me the last 2 days holiday I've taken which surely I'm entitled to? I have emailed them about this and this was the response I've received: "The method she has used is correct, however the calculation is done on the amount earned (their gross pay) rather than the number of hours worked. So she may have only 27 holiday days but because she has done additional hours she receives a higher pay for those days. This is what we do for everyone. If we used the below method she would have more holiday days but her pay would have been lower." But surely they can't change what my contract says?
Stephanie - 12-Oct-16 @ 11:22 AM
CHEF - Your Question:
I have been at my job 3 months my probationary period I have worked an average of 50 hours a week and I have had 2 weeks off sick in which a medical note was provided. I have now been dismissed. Is this allowed ? Am I entitled to SSP ? How much holiday pay am I entitled too ? My wage is 8 an hour and I haven't signed a contract. Please help.

Our Response:
As you have been working for your employer, you have a contract, even though you haven't been given one physically. If you were not paid by your employer during your sick period you will be entitled to SSP and your employer is responsible for this.You will be entitled to the relevant proportion of your holiday pay for the period you have worked, so if you have worked 3 months and didn't take any holiday you will be entitled to a quarter of your annual entitlement.
SafeWorkers - 5-Oct-16 @ 10:16 AM
Razzerc - Your Question:
I have just finished my 3 month probation period and waiting to get review from employer.but I got told of probation the company where holding back 10% of my wage until I completed probation. Should I get them 3 months probation pay in refund or not ? Now am set on permanent

Our Response:
If this was documented/in the terms of your contract then you should receive the further 10% when you are made a full employee.
SafeWorkers - 4-Oct-16 @ 11:01 AM
I have been at my job 3 months my probationary period I have worked an average of 50 hours a week and I have had 2 weeks off sick in which a medical note was provided. I have now been dismissed. Is this allowed ? Am I entitled to SSP ? How much holiday pay am I entitled too ? My wageis 8 an hour and I haven't signed a contract.Please help.
CHEF - 4-Oct-16 @ 3:12 AM
I have just finished my 3 month probation period and waiting to get review from employer .but I got told of probation the company where holding back 10% of my wage until I completed probation. Should I get them 3 months probation pay in refund or not ? Now am set on permanent
Razzerc - 3-Oct-16 @ 1:21 PM
Ak - Your Question:
Hi,I have resigned for my post and am in probation period.probation period is 6 month I have completed 5 months only,so notice period is 2 months and am compensating my salary for 1 month and for another month I served.do I need to pay 1 month salary when am in probation period

Our Response:
Sorry we don't understand your question. The notice period you give is usually detailed in your employment contract.
SafeWorkers - 16-Sep-16 @ 2:37 PM
Hi,I have resigned for my post and am in probation period.probation period is 6 month I have completed 5 months only,so notice period is 2 months and am compensating my salary for 1 month and for another month I served ..do I need to pay 1 month salary when am in probation period
Ak - 15-Sep-16 @ 7:24 PM
I Have a 20 horse contract with my current employer of 18 months. I have always worked an average of 42 hours per week in the last 18 months. I can't afford to take holidays(in the first 12 months I only had 3 days holiday and lost 25 days). I'm due a holiday but I can't afford to loose money. Although I'm on a 20 hour contract should I be entitled to more holiday pay? Also should my contract be renewed as I've never worked my 20 hours?
Liam90 - 14-Sep-16 @ 8:30 PM
fight4right - Your Question:
When on a weeks holiday I receive average 12 weeks pay, what pay should I receive if I take just one night shift off. Would it be basic hours or should it include the shift allowance also?

Our Response:
Your holiday pay isbased on the average in the 12 weeks before you take the holiday.
SafeWorkers - 12-Sep-16 @ 10:47 AM
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