Calculating the correct amount of holiday pay owed to an employee can prove to not be the easiest of tasks for any employer as it is dependant on various factors. Does the worker have fixed working hours or not? If so does their pay vary with the amount of work they have done? Do they work overtime and is there overtime guaranteed or not?
Guaranteed overtime (obligatory on the part of the employer and the employee) are considered towards there normal working hours. On the other hand non guaranteed overtime does not count for workers with fixed contract hours; instead statutory holiday pay is calculated with reference to the contractual hours only.
Last year the Court of Justice of the European Union (CJEU) and subsequently the Supreme Court judgments in British Airways plc v Williams cast dispute on this. The Williams litigation established that an employee must not be financially worse during annual leave than if they had to continue working.
Under the EU law, employees are entitled to receive ‘their normal remuneration’ when taken any holiday leave. This includes not only there basic salary but also is linked to there ‘performance of the tasks’.
Although the case of Williams directly concerned holiday pay and flight supplements for pilots under Aviation Directive instead of the Working Time Directive, the CJEU preceded on that the principles apply to both directives.
It also reached Williams’s attention that whether other types of workers could argue the certain commission payments or non-guaranteed overtime currently excluded from any holiday form part of there ‘normal remuneration’ Has Williams opened another holiday pay floodgate?
An employment tribunal decision in Neal v Freightliner Limited found that any holiday pay must included non-guaranteed overtime, compulsory or voluntary it does not matter, Furthermore any individual can potentially claim for several years of under payments in the question in case this in individual was able to claim for underpayments going as far back to 2007 when this employment began.
This case may have opened a floodgate which could result in expensive litigation for employees attempting to prove the holiday pay they are entitled to.
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