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Employment tribunal ruling on overtime in holiday pay

03rd September 2013

In Neal v Freightliner Ltd the Employment Tribunal held that Mr Neal was entitled to receive holiday pay which included elements not included in his basic salary.

Mr Neal was contracted to work 35 hours a week. During certain times of the year he was required, by contract, to work overtime which was not voluntary.

The tribunal confirmed that as Mr Neal was contractually obliged to carry out overtime, even though he volunteered to do it, this was intrinsically linked to his pay.

Employers should note that the Tribunal held that wording of Regulation 16(3)(d) of the Employment Rights Act should be revised and that it now suggests that employees who undertake varying hours of overtime should be classed as having “no normal working hours”. For such employees, holiday pay should be calculated using an average of the remuneration made during a 12 week period immediately prior to the holiday period.

Employment solicitors are now urging employers to consider contractual obligations such as overtime when calculating holiday pay and to seek expert advice to ensure they are fulfilling their legal obligations under UK employment law.

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