In the case of Bear Scotland v Fulton 2014, published today, the EAT has held that payments for normal non-guaranteed overtime is part of normal remuneration and must be included in the calculation of pay for holiday leave taken under regulation 13 of the Working Time Regulations 1998, as must travel payments in excess of expenses.
Two employees brought their claims for a shortfall in holiday as a series of unlawful deductions from wages. They argued that the calculation of holiday pay should include their overtime pay and taxable pay earned during travel time. The EAT agreed.
Implications for employers
The new rule applies to the basic entitlement of 20 days’ entitlement for full-time employees granted under the Working Time Directive, not the additional 8 days’ entitlement for full-time employees granted under regulation 13A of the Working Time Regulations 1998.
Employees are already entitled to bring claims for underpayments in holiday pay spanning a number of years as a series of unlawful deduction from wages. The EAT has given employers some relief in confirming that that such claims will be out of time if there has been a break of more than three months between successive underpayments. Read the full judgment here
The Government has set up a taskforce chaired by Vince Cable to assess the possible impact of this ruling. Read the Government announcement here