Calculating Holiday Pay: New Rules Introduced to Limit Back-Dated Payments

BlogHR Advice Posted: Tuesday 17th March 2015 by

New regulations to limit and clarify the maximum amount of back-dated holiday pay that can be claimed have been introduced.  A two-year cap on back-pay for holiday pay will apply to claims lodged on or after 1 July 2015.  This will reduce potential costs to employers and give certainty to workers on their rights.

The following should be considered when calculating statutory holiday pay entitlement:

  • guaranteed and normal non-guaranteed overtime (there is currently no definitive case law to suggest that voluntary overtime needs to be taken to account),
  • commission,
  • work-related travel may need to be factored into statutory holiday pay calculations,
  • a worker’s entitlement to holiday pay will continue to accrue during sick leave,
  • workers must take their statutory paid annual leave allowance and can only be paid in lieu for this when their employment ends.

There are different rules for calculating holiday pay depending on the working patterns involved.

If you would like help with updating policies for your employees with regard to holiday pay calculations or some general advice, contact Alasdair@humanresults.co.uk.

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