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Holiday Pay Audits

How should employers calculate statutory holiday pay? Until recent years, it was generally accepted that holiday pay could be based on basic pay only.

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However decisions from the European Court of Justice and UK courts have thrown this into question, confirming, for example, that EU Law requires non-guaranteed overtime to be included in the calculation.  A number of cases are currently proceeding through the UK courts relating to commission and voluntary overtime.

Employers concerned about these issues should consider their current method of calculating holiday pay, their likely financial exposure to any retrospective and future claims and ways in which they might wish to respond to any future changes in the law. Lewis Silkin’s holiday pay audit service will review and report on these areas for you, drawing on our expertise in this tricky area of law and considerable experience in advising clients on holiday pay issues.

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Latest decision on holiday pay - regular voluntary overtime payments to be included

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The EAT has clarified that regular voluntary overtime payments form part of “normal remuneration” and should be included in the calculation of holiday pay for the purposes of the four weeks’ minimum annual leave entitlement required by EU law.

Supreme Court ends British Gas challenge to holiday pay ruling

02 March 2017

The Supreme Court has refused permission for British Gas to appeal against an important ruling that the calculation of holiday pay should include results-based commission.

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Calculating holiday pay - the current position

30 November 2016

The calculation of holiday pay has become a major issue of concern for employers, with recent cases indicating that the approach allowed under UK law of basing holiday pay on basic pay only does not comply with the requirements of European law.

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