Employment Law – Employee wins right to receive increased holiday pay

An employee has won the right to receive holiday pay which is based on his full salary including overtime instead of just his basic salary.

It’s an important judgment that could benefit thousands of people.

The worker at the centre of the case, Mr Neal, was contracted to work a 35-hour week made up of five seven-hour shifts. His terms also stated that he may have to work overtime when necessary.

In practice, he regularly worked up to nine hours a day, increasing to 12 hours when he was called upon to cover for colleagues.

The overtime payments were not reflected in Mr Neal’s holiday pay, which was based on basic salary alone. He took legal action claiming that the company was making unlawful deductions from his wages in breach of the Employment Rights Act 1996.

The employment tribunal found in favour of Mr Neal. It held that the overtime he worked was intrinsically linked to the performance of his duties. Whether the overtime was voluntary or not was irrelevant.

The judgment means that overtime which is an integral part of an employee’s role should be taken into account when calculating holiday pay.

It should be noted, however, that this ruling only applies to the four weeks’ holiday entitlement available under EU law. It doesn’t apply to the Bank Holidays available under UK law. This could lead to some confusion so it is likely that there will be further legal developments to clarify the situation.

We shall keep clients informed of developments.

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law.

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