Holiday pay to include payments for non-guaranteed overtime

If you are required to work overtime when it is offered to you, a recent ruling by the Employment Appeal Tribunal may entitle you to an amount for overtime within your holiday pay.

If you work purely voluntary overtime, then your employer currently has no obligation to include an amount for overtime in your holiday pay.

As a result of this judgment many businesses will be reviewing how holiday pay is calculated and may choose to include an amount for voluntary overtime in the calculation of holiday pay.

The ruling also held that travel time payments for more than expenses incurred, which amount to additional taxable earnings, must also be reflected in holiday pay.

If you work non-guaranteed overtime (overtime which does not have to be offered but the worker is obliged to work) and have received holiday pay in the last three months, then you may claim an amount for the overtime that should have been included.

At present, it seems unlikely that employees will be able to bring claims for overtime pay going back further than the last three months, but this is likely to be the subject of a legal challenge by trade unions so watch this space for further information.