If you work overtime or on commission, a court ruling could mean you can claim greater holiday pay entitlement.
A ground-breaking ruling could pave the way for people who’ve worked overtime or on commission to claim extra holiday pay.
The Employment Appeal Tribunal (EAT) rejected appeals from three companies – road maintenance firm Bear Scotland, engineers Amex and industrial services group Hertel – following an earlier ruling that employees could include overtime in holiday pay claims.
Law interpretations
The case hinged on an interpretation of the EU-introduced Working Time Directive. The tribunal ruled that the companies involved, and potentially many UK firms, had been interpreting it wrongly.
It said: "The EAT held that Article 7 of the Working Time Directive is to be interpreted such that payments for overtime which the employees in two appeals before it were required to work, though which their employer was not obliged to offer as a minimum, is part of normal remuneration and to be included as such in the calculation of pay for holiday leave taken under Regulation 13 of the Working Time Regulations 1998. Those Regulations could be interpreted so as to conform to that interpretation.”
This case has highlighted that UK interpretation appears to be that only basic pay is taken into account.
However, the appeal tribunal ruled that claims cannot be made more than three months after the last incorrect payment.
Reaction
Businesses and business groups say the ruling could lead to many companies facing closure if they are hit with a number of claims.
However, unions welcomed the news, although it could ultimately lead to a reduction in overtime.
The Government has promised to review the ruling urgently.
Business Secretary Vince Cable said: “"To properly understand the financial exposure employers face, we have set up a task force of representatives from government and business to discuss how we can limit the impact on business."
With so much riding on the outcome, this ruling is almost certain to be taken to the Court of Appeal, where a decision could take months, if not years.
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