Employment law 2014 preview: holiday pay

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Calculating the correct amount of holiday pay owed to a worker can prove to be a tricky task for an employer as it is dependent upon various factors. Does the worker have normal working hours or not? If they do, does their pay vary with the amount of work done? Do they work overtime and is that overtime guaranteed or non-guaranteed?

Traditionally, UK legislation has been interpreted so that guaranteed contractual overtime (obligatory on the part of the employer and the worker) was considered to count towards ‘normal working hours’. However, non-guaranteed overtime did not count for workers with normal contractual hours: instead statutory holiday pay was calculated with reference to the contractual hours only.

But in 2012, the Court of Justice of the European Union (CJEU) and subsequent Supreme Court judgment in British Airways plc v Williams cast doubt on this. The Williams litigation established that a worker must be no worse off financially during annual leave than if he/she had continued working…

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