Holiday pay and overtime – no appeal

Posted: 1st December 2014

EATIn the latest case on workers' remuneration during annual leave (Bear Scotland Ltd. and Others v Fulton and Others), the Employment Appeal Tribunal (EAT) decided that employers should include ‘non-guaranteed’ overtime that is routinely worked when calculating an employee’s holiday pay.

The EAT held that this only applies to the 20 days’ annual leave entitlement guaranteed under the Working Time Directive (WTD), not the additional eight days’ entitlement granted under Regulation 13A of the Working Time Regulations 1998, and claims for unlawful deductions from holiday pay will be subject to the three-month limitation period for bringing claims laid down by the Employment Rights Act 1996. This will limit any retrospective liability on the part of employers, particularly as the EAT ruled that additional leave under Regulation 13A should be ‘the last to be agreed upon during the course of a leave year’.

Recognising the importance of the issues, the EAT granted the parties leave to appeal to the Court of Appeal on all points on which they lost, but doubted whether an appeal against its main finding as regards guaranteed overtime and normal remuneration would succeed.

However, the trade union Unite, which acted for the claimants, has indicated that it will not be appealing against the decision on limitations on retrospective claims.

That is unlikely to be the end of the matter but, for the time being at least, employers should include non-guaranteed overtime when calculating holiday pay, as well as other payments which constitute a worker's normal remuneration.