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

Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 18 Feb 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.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
[Add a Comment]
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
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 carrythese 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
Kazza - 11-Dec-17 @ 3:15 PM
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
Share Your Story, Join the Discussion or Seek Advice...
Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the SafeWorkers website. Please read our Disclaimer.