You may remember from our update in September that the ECJ had ruled that holiday pay should not be limited to basic salary but must correspond to “normal numeration”. In practice, this would include payments such as commission and overtime, but the issue of whether or not voluntary overtime was under appeal.
The Employment Appeal Tribunal handed down its judgement this morning in Bear Scotland v Fulton ruling that non-guaranteed overtime should be taken into account when holiday pay is calculated. In addition, travel time payments which exceed expenses incurred (therefore amounting to additional taxable remuneration) should also be reflected when calculating holiday pay.
If there is any good news for employers it is that the right only applies to the basic 4 weeks’ (or 20 days) leave granted under the Working Time Directive and not the extra 1.6 weeks under the Working Time Regulations.
The EAT also confirmed our advice in our September update; claims for arrears of holiday pay will be out of time if there has been a break of more than 3 months between successive underpayments.
In a further development the Government has announced today that it is setting up a task force to assess the possible impact of the ruling. Consisting of government departments and business representative groups, it will discuss how the impact can be limited.
Whilst it’s not yet clear whether or not arrears going back as far as 1998 can be claimed, or what the outcome or recommendations of the Government’s task force’s assessment will be, we strongly recommend you do what you can now to limit your liability and speak with us about how you might break the series of unlawful deductions. Do something now before one or more of your workers bring a claim to the Employment Tribunal for unpaid holidays.