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Time to get your house in order – Overtime to be linked to holiday pay in landmark ruling

It’s that time of year when we are all starting to plan our holidays for 2015. Have you considered the implications of the landmark ruling by the Employment Appeal Tribunal (EAT) towards the end of 2014. It has been announced that people working overtime can claim for additional holiday pay. To put employers minds at ease, workers will have significantly limited scope for historic claims. This reduces the liability risk for employers and this week has seen an update to the news, stating that workers can make backdated claims for up to a period of 2 years.

At the moment, only a worker’s basic pay counts towards calculations for holiday pay. However, with this decision employers will now have to include regular non-guaranteed overtime payments.

As an added complication, this decision relates to the four weeks holiday pay that workers are entitled to under European law, and does not apply to the additional 1.6 weeks’ holiday that UK workers are entitled to. This has gone to the Court of Appeal and could change the position or help to clear up the confusion.

With a degree of uncertainty still hanging over the decision, it is difficult for employers to decide what the next steps are.  However, there are a number of questions that employers can now explore to assess the impact on the business. This is definitely one to watch for the future, if you are concerned about your obligations or need any support with your holiday policy please get in touch. Our contact details are info@simplehr.co.uk 01506 237753.

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