Tribunal backs overtime in holiday pay

A ground-breaking case at the employment appeal tribunal ruled that holiday pay should also take in to account overtime worked.
This means that some people working overtime could now claim for additional holiday pay as currently only basic pay counts when making holiday payments.
Initial worries were that backdated claims would go back years and cost employers and potentially crippling business but the tribunal ruling also said that employees cannot claim more than three months after the last incorrect payment.
Most employers offering flexible working hours will not be affected as holiday is usually calculated based on the last 12 weeks’ hours worked but businesses operating a strict overtime policy would need to review their policies and adjust pay accordingly.
One employer responded to the BBC News website saying that with more and more legislation preventing business from making a profit I may well bring forward my retirement plans. I am sure he is not alone as once again people with ambition and courage to set up businesses are being penalised for success and providing work.
However, we must also acknowledge that there are also unscrupulous employers who will also take advantage of old rules and only offer a small number of hours as basic pay and therefore quite rightly should now be liable to holiday pay on the actual hours worked.
Umbrella companies usually process holiday pay in line with the hours worked and would not be affected by this ruling.

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