News

The Employment Appeal Tribunal has, this morning, handed down judgment in Bear Scotland v Fulton (and conjoined cases).

The key question was whether overtime should be taken into consideration when calculating holiday pay.

The key points in the judgement were as follows:

Key points:

1.  Workers are entitled to be paid a sum of money to reflect normal non-guaranteed overtime as part of their annual leave payments. This would apply to the basic 4 weeks' leave granted under the Working Time Directive (not the additional 1.6 weeks leave).

2.  Paid travel time, which amount to additional taxable remuneration, should also be reflected when calculating holiday pay.

This ruling has significant implications for any employer who pays overtime. Although leave has been given to appeal, it is generally believed that the ruling regarding the inclusion of overtime in calculating holiday will be confirmed as this has already been confirmed in a European case.

The Employment Appeal Tribunal refused to grant a reference to the Court of Justice of the European Union, but gave permission to appeal to the Court of Appeal.

Employers should now consider how they might wish to proceed and if they need to consider how they pay overtime. Employers are also vulnerable to claims for past payments as employees may have the right to make such claims but this has to be clarified.

Business Secretary Vince Cable has announced he is setting up a new taskforce as a matter of urgency to assess the impact of the ruling and the potential financial exposure employer's face. Until the taskforce has published their findings it will be difficult to provide definitive guidance.