If your workers get overtime, commission or bonuses you must include these payments in at least four weeks of their paid holiday.
You may choose to include overtime, commission and bonus payments in the full 5.6 weeks’ paid holiday (statutory annual leave) but you don’t have to. This is because the law on overtime, commission and bonus payments being included in holiday pay is based on the EU Working Time Directive, which is 4 weeks’ holiday only.
This is the result of a ruling by the Employment Appeal Tribunal in the case of Bear Scotland Ltd v Fulton (and other joined cases). Before this ruling voluntary overtime was not typically included when calculating a worker’s rate of holiday pay. Employers should keep in mind that this ruling may be appealed and as a result, the current law could change at a later stage. Read further details from the Labour Relations Agency (LRA) on holiday and holiday pay.
In the meantime, employers, workers and trade union are encouraged to discuss any concerns arising from this judgement with each other with a view to seeking agreement on any temporary measures or policy changes they feel may be necessary.