Holiday pay entitlement should take into account overtime payments as well as contracted hours, a court has ruled at an employment tribunal.
The tribunal in the Neal v Freightliner Limited case concerned Mr Neal, who worked 35 contracted hours a week at Freightliner’s depot in Birmingham, in seven hour shifts. He often worked overtime, which sometimes increased the shifts to between 9 and 12 hours a day.
While Neal claimed that his holiday pay should take into account his actual pay – which included overtime – his employer disputed this, arguing that the overtime was voluntary and the holiday pay should only be based on the basic salary alone.
The court rejected the employer’s argument, saying that the Working Time Regulations “did not adequately implement European law on working time”, reported Workplace Savings and Benefits.
The tribunal’s decision was consistent with the Williams v British Airways in 2011 which was brought before the Supreme Court, which ruled that regulations should be in line with European working time law, meaning that holiday pay should be worked out with both basic salary and other linked payments – such as overtime – taken into account.
The decision made at the Neal v Freightliner Limited employment tribunal could still be tested by the higher courts, but any paid overtime, whether voluntary or not, should now be taken into account when calculating holiday pay for employees.