The Employment Appeal Tribunal has ruled today that employers must now include most types of overtime when calculating holiday pay under the Working Time Regulations for salaried workers.
The judgment, which covers a number of different claimants working for two separate employers, also deals with some other variable payments and the rights of workers to bring claims for historic underpayments of holiday pay.
The EAT held that the rate of holiday pay during the minimum period of leave must include overtime, even if this is not guaranteed by the contract.
It has also held that it was possible to interpret the Regulations to this effect, which means that, subject to any appeals, this decision binds private sector employers as well as those in the public sector.
This decision does not apply to the additional 1.6 weeks the UK grants workers under the Regulations or any contractual holiday a worker is entitled to in excess of this. It is partly for this reason that the ruling limits the ability of workers to claim backdated payments for historic underpayments.