Does your business pay overtime, bonuses or
commissions to employees? If the answer is yes, then read on
to ensure your employee's don't have a claim for more holiday
Most employers will be aware of the recent media reporting in
relation to underpaid holiday pay for more than
24,000 public and private sector workers.
It appears these miscalculations have arisen because holiday pay
calculations can either be based on the employee's ordinary weekly
pay when they take annual leave, or on their average weekly
earnings over the previous 12 months. Employer's must pay whichever
rate is highest.
Bonuses and one-off payments can also increase an employee's
holiday pay rate. The Holidays Act 2003 says
non-discretionary bonuses are part of gross earnings and must
therefore be included in holiday pay calculations.
Discretionary bonuses are excluded.
Employers should record daily hours and extra payments in their
payroll systems, especially where employees work fluctuating
Current and past employees can claim wage
arrears going back six years. We recommend you audit your
payroll system now and address any issues to avoid unexpected
claims in the future.
For more information, contact Shima Grice.