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A landmark decision on holiday pay entitlement, or was it?

The way in which holiday pay is calculated in order to make payment for time off work can be confusing because of the infinite variety of methods of calculation of a worker’s pay and because the Working Time Regulations are not as clear as they might otherwise be. Europe has decided that the minimum holiday entitlement for a full time employed worker should be
5.6 weeks but how should the pay for those weeks be decided?
In the European Court of Justice on the 15th September 2011 the court in the case of Williams v British Airways decided that the employer had to ascertain the intrinsic link between the work contractually to be done and the remuneration for that work and to then pay the normal remuneration rate. But that was not as clear as it might have been.
Several commentators have suggested that the key point is the question of whether the overtime is compulsory. If it is then it should be included in the calculation but if truly discretionary on the part of the employee then it can be left out of account even if regularly worked, but if regularly worked is it then part of normal remuneration? In the case of Bear Scotland v Fulton the Employment Appeal Tribunal decided that Article 7 of the Working Time Directive is to be interpreted such that payments for overtime which the employees were required to work, though which their employer was not obliged to offer as a minimum, is part of normal remuneration and to be included as such in the calculation of pay for holiday leave taken under regulation 13 of the Working Time Regulations 1998. Those Regulations could be interpreted so as to conform to that interpretation. So there it is – all nice and clear now!!

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