As we move through Spring and Summer approaches the planning of
holidays takes on a renewed importance. Since the advent of the Working Time
Directive, all employees have been entitled to paid holidays. The question,
however, arises “how much holiday pay should they get?” The answer is a day's
pay. But what does that actually mean?
In the case of employees who work fixed hours for a fixed wage, that is
easy to calculate. The problem becomes more difficult when the employees in
question work longer or shorter hours or overtime at different times of the
year. The UK Employment Tribunals have considered this point and found that a
day's pay means what the employee would have earned had the worked on the days
which they were off, so this would include potential overtime, commission or
other similar payments. In practice this is calculated as their average daily
pay over the 12 weeks preceding the holiday. Clearly this will change over
time, so to ensure compliance an employer should perform that calculation for
each employee each time they take a holiday. This may seem a great deal of
work, and indeed it is. The consequences of getting it wrong are, however,
potentially serious.
You as the employer could face a claim for the underpayment of wages in
the Employment Tribunal or even worse, the claim could be brought in the County
Court where the employee could seek to go back and claim over a period of six
years for underpaid holiday pay. It is, therefore, important to get it right.
This blog was written by Dr Michael
Green. For more information on matters discussed in this article, call
Phillipps Green and Murphy Solicitors on 01792 468 684.