Sun, Sea, Sand... and Holiday Pay
Calculating holiday pay for workers with irregular working hours
No matter the working pattern, a worker should still receive holiday pay based on a 'week's normal remuneration'. This usually means their weekly wage but may include allowances or similar payments. Some of these payments might include travel time, over time or commission.
If a worker has no normal working hours then their holiday pay would still be a week's normal remuneration but the week's pay is usually calculated by working out the average pay received over the previous 12 weeks in which they were paid.
If a worker works shifts then a week's holiday pay is usually calculated by working out the average number of hours worked in the previous 12 weeks at their average hourly rate.
What can a worker claim?
Employees have the right to claim for a series of deductions from their wages within three months of the latest deduction. Failure to pay holiday (or to pay it at the correct rate) amounts to a deduction of wages and can be claimed in this way. In the Bear Scotland case the Employment Appeal Tribunal (EAT) decided that a gap of more than three months between any deductions for underpaid holiday in the series broke the chain, thereby limiting the employer’s liability. However, the EAT set no limit on how far back retrospective claims could stretch. There is an argument they could stretch as far back as the introduction of the Working Time Regulations (WTR) (i.e. 1998). In Great Britain new regulations were implemented which limited the period for backdated claims to two years from the date of the claim.
The same legislation was announced and planned for Northern Ireland, but it has never been implemented! This means employees can bring claims for a period of 3 months from the date they were last paid incorrectly and back date that to a point they were paid correctly.
If you are an employer and would like to know more information on calculating holiday pay, speak to Kiera Lee, Director, Mills Selig. www.millsselig.com