Holiday Pay: New rules from TODAY

Posted 1st July 2015

Written by Tiggy Clifford

With forecasts of glorious sunshine and the end of school term within sight, many of us are starting to think about jetting off on our summer holidays. 

But what will you pay your staff when they are off?  A number of recent cases have affected how employers must calculate holiday pay under EU rules.  In broad terms, holiday pay now needs to take account of average earnings, not just basic pay.  The rules only apply to the basic 20 days holiday provided for under the EU Working Time Directive.

Claims by employees for shortfalls in their holiday pay were previously unlimited.  The good news for employers is that, from today, those claims will be limited to the last 2 years.  However, employers still need to be clear how to correctly calculate holiday pay in the future and to understand the potential liability of those backdated claims.

This is relevant for employees who receive:

• Overtime pay and premiums
• Shift allowances and premiums
• Individual performance or productivity bonuses
• Commission
• Standby or call out payments
• Allowances based on an employee’s “personal or professional status”

Employers need to work out how to incorporate these changes into their working procedures, update contracts and handbooks and decide which holiday days will be affected.

The employment law team at Newtons Solicitors pride themselves on providing clear, practical advice and can help you through this legal minefield.

The employment law team at Newtons Solicitors pride themselves on providing clear, practical advice and can help you through this legal minefield. For a free initial discussion, please contact Tiggy Clifford (tiggy@newtons.co.uk or 0800 038 5500).