Reports suggest that the average cost of a family summer holiday has risen by a fifth this year, due to the uncertainty caused by Brexit and the weakening value of the pound. But the costs of holidays are set to increase for employers, too, following a recent Employment Appeal Tribunal (EAT) decision.
We now have the first appellate decision regarding the inclusion of voluntary overtime payments in the calculation of holiday pay. The EAT in Dudley Metropolitan Borough Council v Willetts and others has ruled that regular voluntary overtime payments must be reflected in holiday pay. That is, at least, for the four weeks' minimum annual leave under EU law.
This ruling may not surprise organisations already erring on the side of caution and including regular voluntary overtime payments in holiday pay calculations. For those holding fire, however, the message is clear: if payments for voluntary overtime are made with sufficient regularity, they will constitute normal remuneration for holiday pay calculations.
If you are tracking which UK employment law rights are potentially vulnerable post-Brexit, do not hold your breath. Whilst holiday pay, rooted in the EU's Working Time Directive, is theoretically at risk the Government has, intriguingly, currently marked it as safe in its proposals for the Great Repeal Bill.
For those organisations with employees or workers who regularly take up the opportunity to work paid overtime, or are on varying regular rota shifts, some of which are voluntary, it is time to assess the payroll implications before the summer is up.
For more information regarding the implications of this case on your operations, please do speak to any member of the team.