Definition
The pay employees receive while on annual leave. UK law requires that workers are paid their normal remuneration during the first four weeks of statutory leave, which includes regular overtime, commission, and other regular payments, not just basic pay.
UK Context
Following the landmark cases of Bear Scotland v Fulton and Lock v British Gas, UK courts clarified that holiday pay for the first four weeks of leave under Regulation 13 of the Working Time Regulations must include regular overtime, commission, and other regular payments. The additional 1.6 weeks can be paid at basic rate.
Best Practices
- Calculate holiday pay using a 52-week reference period, excluding weeks where no pay was received
- Include regular overtime, commission, and shift allowances in holiday pay calculations for the first four weeks
- Review holiday pay calculations regularly to ensure compliance with evolving case law
Frequently Asked Questions
What should be included in holiday pay?
For the first four weeks of statutory leave, holiday pay must include basic pay plus regular overtime, commission, shift allowances, and other payments that are regularly received. The additional 1.6 weeks can be paid at basic rate only.
How is the reference period for holiday pay calculated?
Holiday pay is calculated using a 52-week reference period, looking back from the date the leave starts. Any weeks in which no remuneration was payable are excluded, and the reference period extends further back to capture 52 weeks of data.