Calculating holiday pay entitlement

Bevan & Buckland AccountantsCalculating holiday pay entitlement

Currently all our clients pay employees holiday pay calculated on the contracted hours it looks like this might change as in a recent case a Tribunal was asked whether employers are required to base their calculation of holiday pay on employees’ actual remuneration – including overtime, or only their basic salary.

The Employment Tribunal confirmed that holiday pay entitlement must be based on actual remuneration for contractually required tasks, noting that overtime and shift premia must be included in the calculation.

This case will be of particular interest to employers in the retail sector where overtime, shift premium and other such payments are commonplace.

Pinsent Masons takes a closer look at the case in their HR Briefing.

At a Glance

In the recent case of Neal v Freightliner Limited, an Employment Tribunal (ET) was asked to consider whether employers are required to base their calculation of holiday pay on employees’ actual remuneration (including overtime pay) or their basic salary alone. The ET confirmed that holiday pay entitlement must be based on actual remuneration for contractually required tasks, noting that overtime and shift premia must be included in the calculation.

Background

This judgment follows on from the recent Supreme Court decision in British Airways plc v Williams and Others in which it was held that employees should be paid their “normal remuneration” during their four weeks’ statutory annual leave. The principle is that employees should be put in a financial position comparable with periods of work. In the BA case it was held that the pilots’ holiday pay should be calculated by assessing average payments made over a representative reference period, including flying pay supplements.

In the wake of this decision there had been some uncertainty as to the wider application of this principle, as the BA case was dealt with under the Civil Aviation (Working Time) Regulations. However, the decision in Neal v Freightliner Limited leaves little doubt that the scope of this principle has been extended beyond the airline industry and we are seeing a considerable number of claims for holiday pay to include payments for overtime, shift premia and other allowances.

The Employment Tribunals have also released statistics which show that claims under the Working Time Regulations (WTR) doubled in the first quarter of 2013 and accounted for a third of all claims submitted.CIPP

http://www.cipp.org.uk/

Bevan and Buckland, one of the largest accountancy firms in Wales with offices in Swansea, Cardiff, Haverfordwest, Pembroke, Carmarthen and St David’s, could help. It is easy to separate payroll from a company’s other accounting practices, meaning that the work can be outsourced to a specialist agency. Bevan and Buckland, which has a track record spanning more than a century, has a dedicated BACS accredited payroll team, and can offer companies a fully-managed and confidential payroll service. One major benefit is that they will then take on the responsibility of keeping up-to-date with all the legislation.

For further information about how Bevan and Buckland can help your company with management of the payroll contact Tina Davies on 01792 410100 or by email at help@bevanbuckland.co.uk.

To find out what other services are offered by Bevan and Buckland visit www.bevanbuckland.co.uk.

Tina Davies
MCIPP(dip) Member Chartered Institute of Payroll Professionals

Tina Davies is manager of Bevan & Buckland’s Swansea Payroll Department, we also operate a payroll bureau service from the firm’s Pembroke and Haverfordwest offices.  

http://www.bevanbuckland.co.uk/services/payroll Tel: 01792 410117

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383

Bevan & Buckland Accountants Carmarthen Tel: 01267 233115

Bevan & Buckland Accountants St David’s Tel: 01437 720352

Comments are closed.

%d bloggers like this: