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27th March 2018

Voluntary Overtime in Calculation of Holiday Pay

Workers are entitled to statutory holiday pay each year, and must be paid at the rate of a week’s pay. But what determines a “week’s pay”?

Recent court cases have arisen from the calculation of holiday pay. In one case, a worker’s overtime payments had to be included in the calculation of holiday pay. In another case, the EAT decided that voluntary or regular overtime were entitled to have the overtime included in their holiday pay.

In another case, a group of plumbers, roofers and electricians had set hours each week, but also volunteered to perform additional hours of overtime work each week and the voluntary hours were excluded from their holiday pay. The Employment Appeal Tribunal (EAT) determined that the voluntary overtime should be included in the calculation of holiday pay. The EAT stated workers should receive “normal pay” when they take holiday leave, so if regular overtime is a normal occurrence, they should be paid accordingly.

If employees are working regular overtime during the year, or just at certain points of the year, it becomes a worker’s “normal” pay and should be included in the calculation of holiday pay so the worker is not penalized for taking holiday leave.

If you need help with calculating holiday pay, or general questions related to your payroll, contact us – we can help simplify and integrate your payroll, time and attendance, and HR functions.

Need help to understand what solution is best for your business?

Speak with our expert team today on 028 2764 1060

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