Calculating Holiday Pay: Nothing Relaxing About It

A recent tribunal decision Neal v Freightliner Ltd held that overtime pay, whether compulsory or voluntary, must be included when calculating holiday pay under the Working Time Regulations.

Calculating the correct amount of holiday pay owed to an employee under the Working Time Regulations (WTR) has never been plain sailing for employers. Where an employee has "normal working hours" (as opposed to working shifts or contractually variable hours),  his holiday pay is based upon those hours only.  The WTR and the UK case law state that non-contractual hours of work, such as voluntary overtime, should be ignored.   In line with this, most employers calculate holiday pay for employees with "normal working hours" on base salary only.