Holiday Pay

Holiday Pay

  • Date: Thursday 29th September 2016

In 2015 new case-law regarding the payment of holiday pay and overtime meant that many employers faced new challenges and were forced to fundamentally review the way in which they remunerate their employees.


This year it was also been confirmed that commission payments or regular bonus payments relating to performance may also have to be taken into consideration.


Since this is an area we still frequently receive questions about, here are the facts:

  • For employees receiving additional payments for guaranteed, contractual or enforced overtime, holiday payments need to reflect the average wage they would have received, had they not been on leave.
  • Voluntary overtime does not need to be considered. However, please be aware that you can’t contractually opt out of the case-law by stipulating that all overtime is voluntary. During a dispute, each case will be thoroughly investigated.
  • Work related travel needs to be reasonably included in this calculation.
  • Commission or work related bonus payments must also be considered. However, no specific guidance is currently available on this issue so please seek advice if you are affected.


All of the above only apply to the four weeks annual leave entitlement, not the eight customary Bank Holidays.


The rules surrounding holiday payments are currently all based on recommendations following a number of cases relating to this issue. Therefore, there still is a lot of ambiguity about how certain parts of this complex decision will be applied in the future.


Do seek advice and guidance if you are unsure about your responsibilities. Our HR Advisor Service can provide hands-on recommendations on this and other challenges so please do not hesitate to call us.


Source: SSG - Manuela Grossmann

Bookmark and Share

Return to listings