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Employers could spend ‘billions’ on new holiday pay rules

4 November 2014

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Overtime could be included in holiday pay for millions of workers in the UK depending on a court ruling later today. 

Employers could have to pay out billions in backdated pay, estimates suggest. Only basic pay is taken into account when calculating holiday pay at the moment. 

Three employees of the road maintenance company Bear Scotland have claimed that voluntary overtime pay should have been included in their holiday pay (Bear Scotland vs Fulton). 

Two other cases, Amec vs Law and Hertel vs Wood, are also included in the Employment Appeal Tribunal ruling. 

One-sixth of the 30.8 million people in work get paid overtime, government estimates suggest. If the ruling is passed, around five million workers should be given more holiday pay. 

A spokesperson for the Department of Business Innovation and Skills told the BBC: “The government wants to get the right balance between the needs of employers and employees. 

“We do not believe voluntary overtime should be included in holiday pay and are concerned about the potential impact on employers. 

“We have spoken with business groups and listened to their concerns, as well as intervening in the case to make clear our view.” 

A final decision could be years away, because any ruling is likely to be appealed against. 

The case could be appealed to the Court of Appeal, or could be referred to the EU courts for clarification on how European law should be interpreted.