In a recent Employment Tribunal case the previous regulations for the way in which holiday pay is calculated has been changed.
The law in the UK relating to overtime payments forming part of holiday pay has been strongly against workers since 2004 when the courts, in the case of Bamsey v Albon Engineering and Manufacturing Plc  IRLR457, held that overtime pay should only be included in workers’ holiday pay if the employer was required to give the workers overtime. In reality this is often not the case and, whilst many workers’ contracts require them to work overtime if the employer wants them to, this usually does not work both ways, and employers are not normally required to give workers overtime.
From 2004 until now, this had meant that if workers were obliged to work overtime they didn’t get the pay for that overtime included in their holiday pay and instead received their basic pay only. For some workers this meant they received less than half their normal pay when they were on holiday.
The employment appeal tribunal in Hertel (UK) Ltd v Mr Wood & Others UKEAT/0160/14/SM; and Amec Group Ltd v Mr Law & Others UKEAT/0161/14/SM confirmed their decision relating to this in the case.
The appeal tribunal has ruled that the decision in the Bamsey case was wrong and where workers are regularly required to work overtime, the overtime pay should be included in their holiday pay under European Law.
Your clients will therefore need to factor in this decision when they calculate the rate of pay that employees are paid for holiday pay. The tribunal decision can be accessed at http://www.judiciary.gov.uk/wp-content/uploads/2014/11/bear-scotland.pdf if you have a yen to wade through the judgement.
From now on, holiday pay rates should reflect overtime payments made, even if the overtime was not guaranteed by the employer.