A ground-breaking tribunal has today ruled that staff members who work overtime could claim for additional holiday pay.
The Employment Appeal Tribunal ruled that it is no longer acceptable for employers to only consider basic pay when calculating the amount an employee should be paid when they are on holiday.
This has been deemed a success for unions who represent workers that “who work long and hard to make a living”. Some have accused the critics of scaremongering about the impact of the ruling; they believe British business is more robust than many spokespeople suggest.
Whilst some consider it to be a victory, the repercussions for UK employers will be sizeable. Businesses are likely to face a multi-million pound bills following this ruling, as employers who regularly work overtime as part of their job can claim and back-claim for payments.
EU law states that employees are entitled to four weeks’ holiday each year, but the method for how the holiday is calculated is unclear. What is clear, however, is employers who only pay on a basic rate during holidays are not calculating employees’ fairly.
The government has commented on the decision stating they do not agree that voluntary overtime should be included. Vince Cable, Business Secretary, stated they will review the judgement and assess the impact it will have.
The British Chamber of Commerce has also criticised of the tribunal stating the additional pressures on businesses will be “unbearable”.
What does the tribunal actually mean for UK workers?
- Commission and overtime should be included in the calculation of employer holiday pay rates
- The ability to claim back pay is still to be determined
- There is uncertainty about evidence employees need to provide to show overtime is essential to pay
It has been suggested that the potential costs will mean employers look to reduce the availability of overtime, where possible.
Due to the large financial implications this will have on UK businesses, lawyers have suggested an appeal is likely. The final decision could be years away if referred to the Court of Appeal.