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Human resources - Happy holiday

Do you know how much holiday pay your staff are entitled to? After a raft of recent European court rulings, the amount may have changed, says Robert Russell.

There are various rulings from several different sources that may well affect the way employees’ holiday pay is calculated, and which will impact any UK employers currently paying overtime or shift allowances. Essentially the rulings mean that employees are entitled to be compensated for the lost opportunity to earn overtime or shift allowances when on leave.

In British Airways v Williams and others (2012), the European Court of Justice (ECJ) held that any aspect of pay linked to workers’ required tasks for which money is paid must be included in the calculation of the worker’s total remuneration. This means that, in the case of airline pilots, the flight allowance has to be included as it formed part of their holiday pay even though they were on holiday and so could not be flying. They left the decision relating how to link performance and pay to national courts to determine. The Supreme Court ruled that the basis period to use when determining the level of allowances lost could be determined by the employer.

This is an extract from the Finance & Management Magazine, Issue 224, September 2014.

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