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Holiday Pay & Overtime: The Changes

By: Abigail Taylor - Updated: 23 Mar 2021 | 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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My hours has been increased by 8hrs. With my former hours I was entitled to 16 days annual leave. Now I am entitled to 18. According to my calculations, they should be 22 days.Company gave me a calculation that had no sense or explanation. So they have just decided to calculate holidays differently from before, so I get less comparatively than my colleagues because they have increased my hours. Could they do that? Apply different holiday calculation?
Partime - 14-Jan-21 @ 4:22 PM
I had to shield under gov guidelines and then my medication failed and exacerbated my disability, my boss now says my old hours and shift patterns are no longer available as they have had to change the way the surgery is run can they technically take my job away?
Vand - 30-Oct-20 @ 1:28 AM
Does anyone knows the formula to calculate the overtime holiday?
Dave - 15-May-20 @ 2:34 PM
alternate leave OR day in lieu, can employees take these days off whenever they like?
sweetaz - 17-Apr-20 @ 8:56 PM
I am in a basic plus commission job, this month I got an extra payment for taking holiday to include my average daily commission. We were not aware of this and my question is am I able to claim for holiday taken previously as the company has not paid this and have not made their staff aware
Stamford - 31-Jan-20 @ 3:01 PM
My employer (an international company) had not implemented any form of enhanced holiday pay for shift/on call workers since I arrived in 2013. I lodged a request about this is 2014 and have been battling them ever since for updates about if and when they plan to introduce amendments to take account of it. I've been continously fobbed off by HR for the entire period with excuses such as software problems and time to integrate these into the systems but for the last year I've just been completely ignored. Is there a way I can force my employers hand? Can I take a case to tribunal or court? I'm not really sure what else I can do. I've even raised it at a senior management feedback forum but again received no formal response. To say I'm annoyed is an understatement. I suspect they've done nothing over this entire period and are just hoping I am going to fade away.... Any advice on how to push this forward appreciated.
Ads - 9-Dec-19 @ 12:13 PM
Today I have been told by HR about how my holiday pay will be calculated going forward to take into account the overtime.They are only backdating to November 2018 and told me this is when the new legislation came into force.I am sure this new ruling applies back to 1996.I know for a fact the new legislation came into play around 2014 but that employees were able to claim back to 1996. Please advise how far back my employer should be paying me for. I have worked with them since April 2014, they took my previous firm over at that time but i have always worked overtime weekly.
Louise - 26-Nov-19 @ 1:54 PM
Average is paid for all holludays during the year
Steve - 10-Oct-19 @ 2:19 PM
Do you get your average wage at both your summer and christmas holiday or is it only worked out for one of the 2 weeks holiday you are off
Clanny - 10-Oct-19 @ 7:12 AM
I have an issue i cannot get answered, i work 4 on 4 off 12 hour shifts, days and nights, if i take a holliday im only paid 9.5 hours.They say they take last 12 weeks and devide it by 5 to give my average.But we dont work 5 days or even book 5 days,we book 4 days holliday. So why are we not getting a full days pay.Taking 4 days holliday i lose ten hours pay surely this has to be wrong
Steve - 9-Oct-19 @ 9:08 PM
Hi i work on average 6 days a week and 7 out of the 8 bank holidays as a farmer how much holiday should I receive per year thanks Al
Al - 15-Aug-19 @ 4:40 AM
Hi,I work for a job agency,I have worked 4 9hr days and taken 1 day holiday in the same week,that is 44hrs I am entitled to,they are refusing to pay me the 4 hours in overtime pay because they said I had 1 day holiday so the agency will only pay the 4 hours in basic pay,is this right or wrong??? Many thanks Ian
Eee - 7-Aug-19 @ 9:41 PM
The place I work for was taken over at the beginning of the year. I have just asked about holidays and getting holiday pay.My boss says that he doesn't pay holiday pay, nor does he pay towards a work place pension. Also if I read your article right If I have not taken hoilidays by the end of the year I lose them ….. does this mean if I haven't sorted this out and he drags out not paying me holiday pay uintil the end of the year he gets away from having to pay it at all? I know what he is doing is not legal, but I cannot afford costs to take him to court, nor can I afford to not work. All the staff in his businesses are in the same boat.What is the best way to handle this?
GrumpyKitten - 25-Jul-19 @ 11:24 PM
10 hours minimum overtime per week. Missed this off previous comment
Mike - 25-Jun-19 @ 6:40 PM
I have been employed for 14 years. I work 35 hours a week and on average 10 hours minimum a week. I noticed last month and again this month on my wage slip an additional entry in the payments section. This says holiday pay 2. I have asked the payments office what this sum is and they have said “when you now take annual leave you are paid an average for f your overtime worked for the last 12 weeks in addition to your basic pay”. Should this have been implemented back in 2014 as I have been on gov.uk? Please advise
Mike - 25-Jun-19 @ 6:35 PM
Worked for the same company 9-4.30 5 days a week for 5 years. They said that they couldn't afford a payroll system so I am self employed. I am expected to work these hours and have to do my own tax return and pay full NI contributions. I have to invoice them weekly and if there is no work for a few hours occasionally then I go home without pay.They expect me there for these hours and treat me as if employed i.e. what they will pay me which is just above the minimum wage.There is no negotiation involved in this. I have no holiday pay even for bank holidays and no sick pay. I am 60 now and feel that this an abuse of my rights as what they see of me is "their" staff. I am so fed up and all the government websites are little help. I can't afford holidays as it will cost me more just for an unpaid week off.They are disgruntled when any worker wants the same time off too. Please advise me as to what to do.
fox - 12-May-19 @ 11:14 PM
I work in the security area. My rota is 4 on 4 off nights. However i usually work around 25 shifts per month. Between 7 and 9 extra overtime shifts paid at normal rate. Its my choice. But my question is do these extra shifts increase my holiday entitlement. I currently get 23 per annum
Mart - 17-Apr-19 @ 9:37 PM
Hi I'm just wondering if anyone can help me regarding working overtime and holiday pay ? I'm am in a salaried position but am paid overtime when we stock take,which is usually quarterly, the hourly paid workers in my place of employment got their enhanced holiday paid rate with their Christmas pay but when I've asked if I'm entitled to my enhanced rate in my January pay I'm being told it's only hourly paid workers who work regular overtime are entitled to this and because I'm salaried and don't work overtime regularly I'm not. Any help would be great. Thanks in advance
Mandy63 - 26-Jan-19 @ 9:41 AM
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. 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
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
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 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
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
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
dino17 - Your Question:
Hi, I am a shift worker and have been employed by the same company for the past 24 years.I get paid 37.5 hour week but I work 4 x 12 hour shifts.I regularly work random over time shifts, probably on average of 36 hours extra a month, I get paid time and a half for these shift.Because I work in the Chemical industry with continuous process we are told that 'The provisions of the Working Time Regulation do not apply to this sector of industry.'My question is, should I be gaining extra holidays for working these overtime shifts?Many thanksDino 17

Our Response:
No you don't get additional holidays for overtime. Your holiday pay should however, reflect your average pay over the 12 weeks prior to taking the leave.
SafeWorkers - 22-Jun-18 @ 10:31 AM
Hi, I am a shift worker and have been employed by the same company for the past 24 years. I get paid 37.5 hour week but I work 4 x 12 hour shifts. I regularly work random over time shifts, probably on average of 36 hours extra a month, I get paid time and a half for these shift. Because I work in the Chemical industry with continuous process we are told that 'The provisions of the Working Time Regulation do not apply to this sector of industry.' My question is, should I be gaining extra holidays for working these overtime shifts? Many thanks Dino 17
dino17 - 21-Jun-18 @ 1:23 AM
Hi I have now worked for my employer for coming up to 4 and a half years but still have to accure my holidays. I am a part time worker working 15 hrs a week. Is this correct that I still have to accure my holidays if I have not accrued enough when I take my holiday I have to wait till the end of the year to be paid for the days I took and never got paid for.
Sal - 20-Jun-18 @ 3:48 PM
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