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Holiday pay and overtime (again!)

Employment Law & HR
BG Purple

This week has seen two developments in the law around holiday pay and overtime.

First, the Northern Ireland Court of Appeal has ruled that voluntary overtime may be included in the calculation of holiday pay where it is normally carried out and is an "appropriately permanent feature" of the individual's employment. This mirrors the Employment Appeals Tribunal's decision in the Bear Scotland case. Regrettably this case does not give firm guidance on how employers should decide whether overtime is sufficiently regular to be included in holiday pay. However, employers should be aware that a challenge to holiday pay arrangements could be made and take steps to consider whether their voluntary overtime arrangements pose a risk. 

The second development concerns the issue of how far back courts and tribunals can go when making awards in holiday pay claims. In December the government enacted legislation limiting the impact of recent case law developments. From 1st July, there will be a two year "backstop" period on wages claims, which includes holiday pay claims.

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