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Tribunal ruling results in increases to holiday pay

A significant ruling in relation to holiday pay emerged from the Employment Appeal Tribunal (EAT) last month.

The case in question related to a dispute which had developed between Dudley Metropolitan Borough Council and over 50 members of its workforce.

The group of employees – which included plumbers, electricians and quick response operatives – were contracted to do 37 hours a week, alongside two to four hours of overtime.

However, the employees often performed other duties on a voluntary basis, extending to standby shifts and call-outs.

The claimants argued that they were earning around £6,000 a year in addition to their basic salaries, but this extra income was not included in their holiday pay.

The Council defended the claim on the basis that the voluntary overtime should not be taken into account when calculating holiday pay.

Applying the principles of European Union’s Working Time Directive and the previous cases, the EAT decided that any payment that has been made over a sufficient period of time becomes part of “normal” pay and should be part of holiday pay.

Employers must now look at what an employee is normally paid when at work and pay the equivalent when they are on holiday.  That should include compulsory and voluntary overtime, call out payments, out of hours payments or any other payment normally paid when at work.

The case, which will inevitably be followed by other holiday pay disputes, illustrates the importance of employers avoiding any complacency when they are doing their sums. If you are unclear about whether you are calculating holiday pay correctly, it is important to double check your situation with an expert.

Hethertons Solicitors is able to guide businesses through the complications of calculating holiday pay. Email Jo Yeates or David Scott or call 01904 528200.

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