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Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 12 Dec 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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Hello, I work at an airport, my contract is 4 on 4 off days and night, 6am-6pm for 4 days 4 days off then 6pm-6am for 4 nights then 4 off. My working contract hours are 48 hours every 8 days which equates to 42 hours per week. I often work overtime on my days off at time and a third. My basic salary is just under 19k but i earn around 26k due to overtime. My holiday pay is paid at my basic, am I right in thinking this shouldn't be the case but instead holiday should reflect the higher actual salary i earn, if so... who do I contact in sorting this? How far back can this be backdated? and for holidays where i take 1, 2 or 4 days as holiday, how are these worked out? Must each separate holiday have its figure worked out in relation to the previous 12 weeks before that holiday was taken or can an average be found and used for all previous/future holidays? Thanks
Ricky84 - 12-Dec-18 @ 1:09 AM
I work a 5 on 5 off shift pattern 60hrs over those 5 days. Contract is 42 hrs a week. This entitles me to 28 days holiday my employer has change my shift pattern to 4 on 4 off same contracted hours of 42. They have also reduced our holidays to 23 days as of Nov 11th 2018 . Most employees have used their 28 days but I have used only 23 days surely they can't take 5 days off me surelyI'mentitled to more than that. Don
Geordie - 26-Nov-18 @ 2:44 PM
I booked 3 days holiday and went away went back to work after my 3 days of and worked Thursday Friday sat sun instead of paying me for my holiday that I booked they said I could not be paid overtime when I’ve had holiday so they have given me back my holiday but I always do overtime so now I will loose those days
Jue - 15-Nov-18 @ 10:04 PM
Hi I work in education and for the first year of my employment i was contracted to 20 hrs per week but on average was doing around 18-20 hours in addition (38-40 hours a week for 38 weeks). I believe for overtime hours holiday pay should be included for the first 4 weeks statutory entitlement. Should i receive the same pay for those 4 weeks as i would have if i had been working? So should i get 18-20 hours additional holiday pay at my usual rate of pay?? Does thst make sense?
Lopian1 - 9-Nov-18 @ 11:36 PM
Hi there, I've been working on a zero hour agency contract for 12 week and leaving the post for a permanent role else ware. I've working 540 hours during this period at times working 60 hours in a week. The HR are saying they are limited to offering me holiday based on 37.5 hours per week. Are they able to reduce my entitlement by calculating it on a weekly basis (if in employment contract) to suit them or do they have to pay me the average for the total hours I worked which would be 45 hours a week. Your advice will be much appreciated. My regards! E.
E - 4-Oct-18 @ 8:22 PM
Hi I work at rizzas of huntly and I was just wondering about holiday pay pay. I was told last week from someone out with the company that holiday pay is meant to be an average of the last 12 weeks is that right? If so I havnet been getting that, we just get our standard 40 hours. Can u answer Please
Beano - 27-Sep-18 @ 8:02 AM
Hi. My contract clearly states and I accepted it and happy that at the end if mymy first year that my holiday pay was paid in a lump at theend of the year. I am on a full time contract where I work 8 months, no holiday 35hrs / week. my salary is split over 12 months. All was good. Now my boss is trying to get me to take my holiday allowance days during my 8 months of work. I have written explaining this is not feasible and not agreed in my contract. I like my lump sum in my wages. She has asked by email 3 times now for me to take my holiday and I don't see why she should pressure me against the terms of the contract.I have been employed since 30 April 3018
Dennis - 12-Sep-18 @ 11:08 PM
Hi. Please can you help. I have just started a new job where i work 5 days a week but only work 5 hours per day. My employer has stated I am only entitled to 12 days holiday pay plus the bank holidays. I queried this and asked is that 12 full days so I can take my hols in hours because I thought that 12 days wasn't correct as I work 5 days. They said no - 12 days is because it's pro rata due to me only working 25 hours. There for someone who works the same hours but over 3 days gets the same holidays so they can take a week off and use only 3 days but I have to use 5 days to get a week off. Seems completely wrong. Please can you advise. Many thanks.
Vonny - 31-Aug-18 @ 8:05 AM
I have worked Monday to Friday for about a year. ON a 38 hour contract basis. Now the company i work for has been bought out by another. Now trying to change my contract to work odd weekends. Are they able to do this as i work same shifts every week?There is no specific times or dates on my contract. But have worked same shifts for 12 months
Dutt - 28-Aug-18 @ 1:42 AM
Stace - Your Question:
Help I’m contracted to do 40 hours per a week which I am paid a salary for.I always for well over a yeah worked Monday late Thursday and Friday late which is extra on top of my salary as it’s not part of it my boss puts holidays on the system and when I asked how holiday pay works she said it’s so I get my salary should I not be getting holiday pay for my extra work a do as this is not part of my salary please help

Our Response:
Additional payments such as voluntary overtime should be taken into account when calculating statutory holiday pay. Usually an employer should use your average salary from the 12 weeks prior to your taking leave.
SafeWorkers - 24-Aug-18 @ 2:33 PM
I am contracted for 15 hours a week but work 30 hours a week or more Can you please tell me my minimum holiday entitlement Is it based on actual working hours or contracted hours When l was on zero contract for same company doing same hours I used to get over a months pay paid by the hour does it mean as i now on contract I will get 15 hours week based holiday pay
Tinkerbell - 23-Aug-18 @ 7:46 PM
Help I’m contracted to do 40 hours per a week which I am paid a salary for...I always for well over a yeah worked Monday late Thursday and Friday late which is extra on top of my salary as it’s not part of it my boss puts holidays on the system and when I asked how holiday pay works she said it’s so I get my salary should I not be getting holiday pay for my extra work a do as this is not part of my salary please help
Stace - 22-Aug-18 @ 1:39 AM
Hello i have been doing regular overtime for 8 years voluntary. I did not recieve holiday pay for overtime. I contacted my employer in april 18 requesting holiday including backdate years. I have in august received a lump sum. All i have been told is that it is backdated holiday from august 2017 owed no explanation of how it calculated. Am i entitled to two year backdate from date requested?
Lisa_J - 20-Aug-18 @ 10:58 PM
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
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