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Holiday pay must include overtime
In a first instance decision in the Employment Tribunal, Neal v Freightliner Limited, has held that overtime payments and shift premiums, which were an inherent part of the employee’s payments and inextricably linked with the performance of his duties, should be taken into account in the calculation of his holiday pay.
The employee concerned was a freight worker employed on a 35 hour week comprised of 7 hour shifts. Overtime was required when necessary, which he was paid. His employment was also governed by a local collective agreement providing for a 9 hour shift pattern. His hours varied day by day according to a weekly roster which provided 24 hour cover Monday to Friday and on Saturdays cover till 2pm, of which he had to work 1 Saturday in 3. He could refuse to work more than 7 hours on a shift although there was an expectation he would work the full shift. In practice his shifts were usually 8.5 to 9 hours and occasionally 12 hours. However the additional roster hours were not taken into account for calculating his holiday pay.
The Employment Tribunal considered the various cases dealing with the payments which should be taken into account in calculating holiday pay and concluded that the Claimant was entitled to holiday pay which was not based solely on his basic salary but which took into account other components which were intrinsically linked to the performance of the tasks which he was required to carry out.
In coming to its decision, the Tribunal construed the Working Time Regulations so as to disapply sections 223(3) and section 234 of the Employment Rights Act. This case is on appeal to the EAT and the Update will report further when this is heard.
This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.
For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.
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