There has been much press coverage about a recent Employment Appeal Tribunal decision which confirmed that overtime worked by employees should be taken into account by their employer when calculating holiday pay. At the moment, only basic pay counts when calculating holiday pay.
This decision could affect up to five million workers and entitle them to more holiday pay. Many business groups are pointing out that the decision could have a significant impact on UK businesses facing the possibility of a large number of claims for holiday pay.
At the moment, however, it is unclear whether employees will be able to claim back pay. Given the financial ramifications and the uncertainty surrounding the decision, it is highly likely that there will be an appeal against the decision. However, any appeal will take a long time to resolve, leaving businesses in a state of uncertainty and financial risk.
Employers are being advised to consider the impact of the decision in relation to their business, review their practices relating to overtime, consider consulting with employees to reach an agreement to settle back pay claims and set aside a budget to cover the possible liability for holiday pay claims.
For more information follow the link: Acas press release
If your business is affected by this decision, contact us.