Recent cases have set a number of legal precedents, the main gist of these is that if a particular pay element is ‘normal’ it should be factored into holiday pay, or at least to the first 4 weeks in any given year. What is ‘normal pay’? If you normally pay commission, you should include average commission into holiday pay. If you normally pay an allowance, you should include it in holiday pay, even if the person is not doing the thing that the allowance is for when they are on holiday. If you normally pay overtime, you should include average overtime in holiday pay. Considering that last point what does paying overtime ‘normally’ mean?
There is no case law, yet, to define that, so our rule of thumb is that if over a period of time a person earns overtime more than just occasionally, it will be likely that overtime is ‘normal’. This is quite a complex topic, and you can read more about holiday pay and recent cases by clicking here.
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