Our opinion and advice on the latest decision that overtime, shift premiums and on call payments should be included in holiday pay by Employment Tribunal
Whilst this first instance decision does not bind future employment tribunals and has not been tested by a higher court, it follows the ECJ’s earlier decision and employers would be safest to assume that any paid overtime, whether voluntary or not, should now be taken into account alongside other premiums when calculating employees’ holiday pay.
A further ECJ ruling on this issue is pending, following a request from the Leicester employment tribunal for a preliminary ruling on the point. The Advocate General, who produced a preliminary opinion for the court to consider, opined that a salesman was entitled to be paid both his basic pay and his commission whilst he was on annual leave. All the indications are therefore that employers should be calculating holiday pay for staff based on their average earnings and not their basic pay, but we will only have clarity on this point once the ECJ has ruled.
Employers should therefore now consider whether, from a risk management perspective, they can afford to continue to exclude additional payments from their holiday pay calculations.