Holiday pay

Q: Does an employer have to include overtime in holiday pay? Although overtime is not part of our contracts, we are rostered to work additional hours every week and have no choice but to work them; yet when it comes to holidays we only get our basic pay.

A: Unfortunately, case law suggests that an employer is entitled to exclude non-contractual overtime, even where the workers are required to work it. The relevant case is Bamsey & others v Albon Engineering & Manufacturing [2004] EWCA Civ 359 ([2004] IRLR 457) at the Court of Appeal. Despite a shorter contractual week, workers were regularly working longer hours as part of a 12-hour shift pattern, which seems similar to the situation you are in.

The amount of a week’s pay for calculating holiday is in accordance with sections 221 to 224 of the Employment Rights Act 1996, which says that workers with “normal working hours” are only paid for those hours when they take holiday. The Court of Appeal said that if a worker is entitled to overtime pay when employed for more than a fixed number of hours, those fixed hours are “normal working hours” and holiday pay is paid according to these. Accordingly, if the workers are paid overtime above 40 hours a week, this makes 40 hours their normal working week and they are only entitled to that as holiday.