Business Surgery: Calculating staff holiday pay correctly

Martin Bloom of Hegarty solicitors. Photo supplied
Martin Bloom of Hegarty solicitors. Photo supplied
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A new employment tribunal judgement is cause for employers of all companies to check the way they calculate staff holiday entitlement.

The Employment Appeal Tribunal gave judgment on November 4 2014 in the case of Bear Scotland v Fulton.

This is an extremely important case and gives definition as to what constitutes weekly pay for the purposes of calculating an employee’s entitlement to holiday pay.

The key points from the case are as follows:-

Firstly, employees are entitled to be paid a sum to reflect normal non-guaranteed overtime.

Secondly, the payments only apply to the basic four weeks’ leave granted under the Working Time Directive and not the additional 1.6 weeks granted pursuant to The 1998 Regulations.

In addition, any claims to Employment Tribunals for arrears of holiday pay will be out of time if there has been a break of more than three months between successive underpayments.

And also, travel time payments which exceed expenses incurred should also be included in calculating an employee’s entitlement to holiday pay.

It is important to note that the Employment Appeal Tribunal has given leave for their judgment to be appealed to the Court of Appeal.

It means that until the Court of Appeal gives a definitive judgment therefore the position is not entirely clear.

It is also worthy of note that the Government announced in November 2014 that it was setting up a Taskforce to assess the possible “impact” of the ruling (particularly insofar as employers are concerned).

The remit of that Taskforce is unknown.

Of course it does not have any power to overrule the judgment of the Employment Appeal Tribunal in any event.

It will be interesting to see what legislation, if any, the Government intends to introduce which may or may not affect the impact of the case.

Perhaps the most significant impact of the case is the fact that claims will be severely limited to the most recent holiday year.

Those employers who feared retrospective claims going back to 1998 will perhaps feel much happier.

However, no definitive answer to the present position can be given.

That is until either or both the Government introduces further legislation, or the Court of Appeal Judgment is forthcoming.

A state of some confusion therefore will no doubt arise for at least the next three – six months.