Overtime doesn’t count towards holiday entitlement – or does it?

The Employment Appeal Tribunal (EAT) decided on 4 November 2014 that any overtime worked does count towards an employee’s holiday entitlement. Yikes!

What does that actually mean?

It means that if you have in their contracts that they work 20 hours a week, and they regularly work 10 hours overtime, every week, then their entitlement will be the same as if you had 30 hours in their contracts.

They can’t ever earn more than full time holiday entitlement of 28 days (which can include bank holidays).

Do I need to worry?

NO! This ruling only applies to COMPULSORY overtime, not voluntary overtime. If you offer overtime and they choose to take it, there is no extra holiday entitlement.

It is also restricted to the previous 3 months, not going back years. If staff don’t claim their extra holiday entitlement within 3 months of earning it, it is lost.

And the ruling is not final. This will go all the way up to Europe to be decided.

So don’t rush to pay out any extra holiday pay yet. Let’s wait a while for the lawyers to argue it out (at someone else’s expense!). Then make the changes!