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Overtime to count in holiday pay

The Employment Appeal Tribunal has issued a ground breaking ruling that means overtime will be counted in holiday pay.

The tribunal ruled on two cases relating to the UK’s interpretation of the Working Time Directive – one involving electricians, scaffolders and semi-skilled workers who worked on a project at the West Burton power station site in Nottinghamshire for Amec and Hertel; and another involving road maintenance firm Bear Scotland.

Unite, which represented the workers, said its members were consistently required to work overtime and received payments for travel time. Payments for that work were not included in holiday pay, meaning the workers received considerably less pay when on holiday, compared to when they were working.

Following the tribunal’s ruling, such workers could now claim for additional holiday pay. They can make backdated claims, but only if they are within three months after the last incorrect payment.

Commenting on the ruling, a spokesman for the British Retail Consortium said: “The BRC is surprised and concerned by today’s verdict, which differs significantly with the UK government’s interpretation of the holiday pay rules.

“Such a change would pose an unacceptable risk to businesses across a wide range of sectors and may threaten the UK’s economic recovery, particularly if it leads to major job losses. While we wait to see if the respondents will appeal, the government must act to protect UK employers who have acted in good faith from these unforeseen costs.”

Business secretary Vince Cable will set up a taskforce to look into the impact of the ruling. “Government will review the judgment in detail as a matter of urgency,” he said.

“To properly understand the financial exposure employers face, we have set up a taskforce of representatives from government and business to discuss how we can limit the impact on business. The group will convene shortly to discuss the judgment.”

The tribunal said the parties in the initial case have been given permission to take the case to the Court of Appeal.

Union of Shop, Distributive and Allied Workers general secretary John Hannett said the union firmly believes workers should get their normal pay when taking annual leave.

“Many workers regularly work additional hours on top of their basic contractual hours and their holiday pay should be based on their average and not their basic pay. We will study carefully the decision of the Employment Appeal Tribunal and support, advise and represent [our] members who believe they have been underpaid holiday pay.”

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