Overtime to be factored into holiday pay

08 Jan 2015

Written by Alice Smithson

A new Employment Appeal Tribunal ruling means that UK businesses will have to offer workers holiday pay based on basic pay plus overtime hours. This means that salons that offer flexible working hours for their staff _ which includes overtime claims _ need to assess their holiday pay with this in mind.

Businesses that currently calculate holiday pay based on basic hours could be remunerating employees unfairly, ruled the tribunal. Current UK law states that holiday pay should be calculated at the basic rate, but this creates a grey area for flexible workers, those with irregular hours and those who often take voluntary overtime.

However, the government has spoken out against the ruling: ïwe do not believe voluntary overtime should be included in holiday pay and are concerned about the potential impact on employers’, said a spokesperson from the Department for Business, Innovation and Skills. Other business groups, such as the Federation for Small Business and the British Chamber of Commerce (BCC), have also spoken against the tribunal ruling.

Adam Marshall, policy director at the BCC, said: ïthis expanded definition of ïpay’ is so ludicrous that the government itself has argued against it. No business should have to pay more than base salary during holiday periods, unless they elect to do so.’

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