EMPLOYMENT 

Are You Receiving The Correct Holiday Pay?

Employees across Great Britain and Northern Ireland are unaware that they are routinely receiving less holiday pay than they are entitled to.

Holiday pay entitlement derives from the EU Working Time Directive and is calculated by reference to an employee’s “normal pay" over a 12 week period. The issue as to what elements of an employee’s salary constitute “normal pay” however has generated significant debate and case law over recent years. To date the courts have considered the following elements of an employee’s salary;

Shift Allowance
In determining that "normal pay" for pilots should include basic salary as well as allowances for time spent flying and time away from home the Court of Justice of the European Union stated in the 2012 case of British Airways Plc v Williams that;

“workers must receive their normal remuneration for that period of rest” and “that the purpose of the requirement of payment for that leave is to put the worker, during such leave, in a position which is, as regards remuneration, comparable to periods of work”

Commission
The Williams case was followed in 2014 by the determination of the Court of Justice of the European Union in Lock v British Gas Trading Ltd which held that an employee whose pay consisted of a basic salary and commission was entitled to have that commission included in their calculation of holiday pay.

Non Guaranteed Overtime

The scope of what constitutes ‘normal pay’ was further extended in the conjoined cases of Bear Scotland Limited v Fulton and Baxter, Hertel (UK) Limited v Wood and others, and Amec Group Limited v Law and others where the Employment Appeal Tribunal confirmed that ‘non-guaranteed overtime’ (overtime which an employer is not obliged to offer but which, if offered, a worker is contractually obliged to accept) can fall within the definition of “normal pay” set out in the EU Working Time Directive and therefore should be included in the calculation of a worker’s holiday pay.

Voluntary Overtime

In the recent judgement of Patterson v Castlereagh Borough Council the Northern Irish Court of Appeal extended the potential scope of “normal pay” further by stating that there is no reason why voluntary overtime (overtime which the employer is not obliged to offer and the worker is not obliged to fulfil) should not be considered when calculating an employee’s holiday pay.

In providing the Court of Appeal’s judgement Lord Justice Gillen reiterated the principles set out in the Bear Scotland judgement;

“that a worker should not have any disincentive placed in his path that may lead to him not taking his holidays – if he comes to expect a certain level of pay as normal then he should receive that during his holiday period.”

If you are an employee and the salary you receive while on holiday does not reflect your normal salary you may have suffered an unlawful deduction from your wages. The value of such claims can be substantial as it is possible to recover underpayments for a significant period of your employment.

If you are unsure of your rights in relation to holiday pay please contact Millar McCall Wylie on 02890 200050 and ask to speak with a member of our Employment Department.

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