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Holiday Pay, what you need to know...

2 December 2014

Holiday pay: no back pay bonanza, but employers must include overtime in future holiday pay calculations.

There has been a recent and highly publicised decision of the Employment Appeal Tribunal (EAT) that decided that non-guaranteed overtime should be included in the calculation of holiday pay. Non-guaranteed overtime is where there is a contractual obligation on the worker to work overtime if requested to do so by the employer but no obligation on the employer to offer overtime.

However, the EAT decision leaves unclear the question of whether or not voluntary overtime should also be included in the calculation of holiday pay. This is where there is neither a contractual obligation on the part of an employer to provide overtime, nor a contractual obligation on the part of the employee to work the overtime.
It seems that the EAT also decided that holiday pay should only equate to ‘normal’ pay for the first four weeks of holiday entitlement, which is that determined as the legal minimum under the relevant European Directive. Any leave over and above four weeks is not covered.
Regrettably, there will be no back pay bonanza!

Disappointingly, despite the fact that the European law on which the EAT made its decision has been in place since 1998, the EAT has severely limited the scope for individuals to pursue issues of back pay.

What is TSSA doing to deal with this
TSSA believes the priority must now be to commence negotiations with employers to ensure that contracts of employment are changed to reflect this important EAT decision. TSSA will be seeking agreements that ALL holiday entitlement reflects ‘normal’ pay, not just the first four weeks of it.                                                   
                                                                                                                                                                                                                                                  It will be necessary to agree with the employer a reference period over which ‘normal’ pay can be calculated to form the basis of holiday pay. TSSA is advised by our solicitors that 12 weeks would be a suitable period.
TSSA would also want to ensure that voluntary overtime is also reflected in the calculation of holiday pay. The union would seek a collective agreement with employers about dealing with back pay issues.
It should be noted that it has already been established that guaranteed overtime, where there is a contractual obligation on the employer to provide it, and an obligation on the part of the employee to work it, must form part of the calculation of holiday pay.

Do I have a claim for back pay?

Sadly, the EAT decision has made this extremely unlikely. You will need to establish that you receive less when on holiday than you do ‘normally’. You will then need to have taken part of the first four weeks of your holiday entitlement within the last three months.
If you believe you may have a claim, please talk to your local TSSA rep, or contact the TSSA Helpdesk on 0800 328 2673, or by email on

Building TSSA in the workplace

TSSA is leading the way in tackling the issue of holiday pay. If the union is to negotiate the best possible deal with employers, TSSA needs to have as much power and influence as possible in the workplace. That means having most if not all workers in TSSA membership!
If you know someone that is not a member, tell them what TSSA is doing on this issue, and ask them to join.
It’s very easy to join – applications can be made on-line here
Please also download a copy of the members Bulletin and display in work areas and noticeboards:   Holiday Pay bulletin


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