A worker’s holiday pay under the Working Time Regulations 1998 (“WTR”) must include payments closely related to the work they do so as not to discourage the taking of holidays as a result of a recent European case.

Workers as well as employees can claim holiday pay so for example if a dealership engages a valet, security guard or someone to deliver cars rather than employing them they can claim holiday pay which is likely to be greater than previously understood and paid since the WTR came into force which is 16 years ago on 1 October 2014.

What may be included?

Commission

This probably should be included but a decision of the Employment Appeal Tribunal is awaited following a hearing at the end of July 2014.

Allowances?

This is uncertain but it should be included if it reflects the costs of employees or workers undertaking their tasks.

Productivity, attendance or performance bonuses

A bonus dependent upon team rather than an individual performance is also potentially covered.

Annual discretionary and other bonuses It is unclear whether this is covered but if an employee is taking a holiday after the payment of a substantial bonus then an employee might engineer higher holiday pay.

Overtime

Overtime which is compulsory and require overtime must be included.

Time Limits

Where there have been a serious of underpayments in respect of holiday pay the period might be from 1 October 1998 when the Working Time Regulations 1998 came into effect. However, recent case law has sais if there is a 3 month gap in holiday payments then that mean that the series is broken Claims be brought 6 years from the payment in County Court.

There are various solutions to these much publicised issues including is to ensure that proper payments are made for holiday pay such that the series of deductions is broken.  Another option is to buy out the claim but that will have to be done in a Settlement Agreement.