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

Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 21 Feb 2017 | comments*Discuss
 

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 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
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?
fight4right - 9-Sep-16 @ 2:45 PM
I have 3 weeks consecutive annual leave booked and my employer has offered me overtime at 1.5 x my normal rate if I work one of them. Does this mean that I will lose my holiday pay for this week?
rodinsippo - 7-Sep-16 @ 7:21 PM
Magic - Your Question:
Hi I have been working about 60 hours every week for about 8 years now im getting paid 40 hours basic pay and about 20 hours overtime pay when im on holiday im only getting 40 hours basic pay Do I entitle to get paid overtime when im on holiday?If im how long back can I claim?

Our Response:
Yes -your holiday pay should reflect your average pay in the 12 weeks up to your holiday. Make a representation to your employer requesting this for any holidays you've taken recently. Back-dated claims can only be made to an Employment Tribunal if it is less than 3 months since the last incorrect payment of holiday pay.
SafeWorkers - 26-Aug-16 @ 11:20 AM
Hi there, I am currently working on which i believe to be a zero hour contract, however im working between 40-60 hours per week some days my shifts starting at 3pm and finishong at 7am. I have just been informed that even if we work passed 7am and work until 8.30am that they only pay us until 7am. Can they do this and if so does that mean they cant ask us to work passed 7am?
Franko - 26-Aug-16 @ 3:53 AM
Mug?? - Your Question:
Hi so I'm on a 38hr salaried contract, it states I work a few hours more if required in my contract which to me would be a couple of hours per week on top yet I actually on an average week work about 52-62 hrs a week, I knew a few hours would be required but if I didn't work this many then my jobs would never get completed. I'm not a slow worker and I don't take the Mick but just amazes me that my work has a dig. This includes driving as I have no set place of work. I get no overtime and often no thanks. I actually love my job as its so rewarding but the lack of money is starting to get me knowhere. And quite often I'm shattered from stupid hours and driving. They can put us up in £190 a night hotel rooms on some occasions but cant/wont pay overtime. Have thought about writing to my employers about increasing my hours on my contract hence paying me more but am not sure what to do for the best. Any help/advise will be appreciated cheers.

Our Response:
Discussing this with your employer is the best course of action. Let them know how many hours you've worked on a regular basis and what you've been paid for. Politely ask if your contract can be changed to include extra paid hours and/or overtime.
SafeWorkers - 24-Aug-16 @ 12:44 PM
Hi I have been working about 60 hours every week for about 8 years nowim getting paid 40 hours basic pay and about 20 hours overtime pay when im on holiday im only getting 40 hours basic pay Do I entitle to get paid overtime when im on holiday? If im how long back can I claim?
Magic - 23-Aug-16 @ 6:53 AM
Hi so I'm on a 38hr salaried contract, it states I work a few hours more if required in my contract which to me would be a couple of hours per week on top yet I actually on an average week work about 52-62 hrs a week, I knew a few hours would be required but if I didn't work this many then my jobs would never get completed. I'm not a slow worker and I don't take the Mick but just amazes me that my work has a dig. This includes driving as I have no set place of work. I get no overtime and often no thanks. I actually love my job as its so rewarding but the lack of money is starting to get me knowhere. And quite often I'm shattered from stupid hours and driving. They can put us up in £190 a night hotel rooms on some occasions but cant/wont pay overtime. Have thought about writing to my employers about increasing my hours on my contract hence paying me more but am not sure what to do for the best. Any help/advise will be appreciated cheers.
Mug?? - 21-Aug-16 @ 10:28 PM
Jules - Your Question:
Done 74 hours over my 23 hr per week contract in the last 12 weeks so I'm off on 15 sept for 5 days what am I entitled hol pay

Our Response:
Your holiday pay should be based on your avergage earnings in the 12 weeks immediately before the holiday is taken.
SafeWorkers - 2-Aug-16 @ 2:40 PM
Done 74 hours over my 23 hr per week contract in the last 12 weeks so I'm off on 15 septfor 5 days what am I entitled hol pay
Jules - 2-Aug-16 @ 2:15 PM
Bluebev - Your Question:
My husband has worked at the same company for over seven years. He works on the night shift and gets a night shift allowance. I have only just found out from him that he does not receive the allowance if he takes holiday - therefore he does not particularly like taking holiday!I do not think this is correct - should he be paid the night shift allowance and can he claim back any monies that have not been paid previously - if so how far back can this claim go.Many thanks

Our Response:
Your husbands holiday pay should be based on his average wage, so should reflect his night shift allowance. He would need to seek legal advice to establish how far back he could claim. He may be able to get the relevant assistance from ACAS
SafeWorkers - 1-Aug-16 @ 11:04 AM
My husband has worked at the same company for over seven years. He works on the night shift and gets a night shift allowance. I have only just found out from him that he does not receive the allowance if he takes holiday - therefore he does not particularly like taking holiday! I do not think this is correct - should he be paid the night shift allowance and can he claim back any monies that have not been paid previously - if so how far back can this claim go. Many thanks
Bluebev - 31-Jul-16 @ 1:38 PM
Db - Your Question:
Hi, I have 25hr contracted hrs, I nearly always work 30-40hrs a week. When I book holiday, I have to use a week, surely I should only have to book my contracted hours off?

Our Response:
Your holiday allocation will be based on your contracted hours, so yes, you should only have to book your contracted hours off. If your employer wants you to change your holidays in accordance with the hours you are regularly working, you should ask for your contract to be changed to a 30 or 40 hour contract. Bear in mind also, that your holiday pay, should be based on your average pay for the previous 12 weeks or so.
SafeWorkers - 5-Jul-16 @ 11:24 AM
Hi, I have 25hr contracted hrs, I nearly always work 30-40hrs a week. When I book holiday, I have to use a week, surely I should only have to book my contracted hours off?
Db - 4-Jul-16 @ 11:14 AM
Kimbo - Your Question:
I have been working for my employer for 5 years and have never had holidays/pay am I entitled to it and how far back can I claim for

Our Response:
All full time employees are entitled to 5.6 weeks holiday a year (which can include bank holidays) - guaranteed by EU law. If you haven't had a single work day off, you should consult ACAS, with the aim of taking this to an employment tribunal.
SafeWorkers - 22-Jun-16 @ 9:53 AM
I have been working for my employer for 5 years and have never had holidays/pay am I entitled to it and how far back can I claim for
Kimbo - 21-Jun-16 @ 9:32 AM
Hi, I am contracted to 19 hours p/w and have been consistently doing an extra 30 hours per month in overtime since March.Was told today that I would only be paid holiday entitlement on my 19 hours per week.
Helen - 17-Jun-16 @ 3:10 PM
I am contracted to 19 hours per week.Since April 2016 I have been continually doing an extra 10 hours per week to cover high workload.Been guided that I am only entitled to holiday pay based on my contracted hours of 19 hours. I have always covered extra work and tried to be accommodating.
hels - 17-Jun-16 @ 3:08 PM
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