Holiday pay and overtime case
A recent decision of the Employment Appeal Tribunal (EAT) in the case of Bear Scotland Limited and others v. David Fulton and others has been widely reported in the press. The case which could have widespread implications found that guaranteed and non-guaranteed overtime should be included in the calculation of pay for holiday pay purposes. It had already been established that guaranteed overtime is part of normal pay and would count towards holiday pay.
This decision found that holiday pay must include overtime (including non-guaranteed overtime) and other allowances if they are ‘intrinsically linked to the performance of the tasks’. In respect of unlawful deduction from wages, the EAT found that employees could not claim any consequent holiday underpayment as forming part of a series of deductions of wages where more than three months had elapsed between holiday periods.
The judgment may lead to employees claiming back pay for holiday pay although for the moment this is restricted by the EAT’s position on a ‘series of deductions’. This would restrict employees from making a claim unless they have had a holiday within the last three months. The EAT has given leave for all parties to the decision to appeal to the Court of Appeal so it is likely that we will be revisiting this issue again in the not too distant future.