Holiday pay

  1. Holiday pay I
  2. Holiday pay II
  3. Holiday pay III
  4. Holiday pay IV
  5. Holiday pay V
  6. Holiday pay VI
  7. Holiday pay VII
  8. Holiday pay VIII

Holiday pay I


  • Statutory entitlement is derived from Working Time Regulations
  • In total it is 5.6 weeks’ paid leave for workers:
    • 4 weeks (Reg 13)
    • 1.6 weeks (Reg 13A)
  • Only the 4 weeks under Reg 13 is derived from the Working Time Directive
  • Therefore only this provision is subject to the WTD rules/case law
  • The 1.6 weeks is subject to WTR; anything over that is subject to contractual agreement

Holiday pay II

  • Entitlement is to “a weeks’ pay” (as per s221-224 ERA)
  • WTD requires “normal remuneration” to be paid. But ERA is incompatible with the WTD (therefore interpret to conform).
  • BUT only applies to the 4 week entitlement derived from the WTD

Holiday pay III

What is the problem

  • Centres on ERA’s calculation of weeks’ pay
  • for “no normal working hours” uses total remuneration averaged over last 12 weeks (includes commission and other benefits)
  • for “normal working hours” excludes non-guaranteed compulsory overtime or bonuses, commission, overtime premiums or allowances

Holiday pay IV

Case Law

  • In Williams v British Airways 2011 – ECJ held the Aviation Directive entitled employees to all pay that:
    • is intrinsically linked to performance and is a quantifiable amount
    • relates to “personal and professional status” e.g. seniority, service
    • the ECJ ruled this interpretation also applied to the Working Time Directive
    • ECJ – a worker should receive their “normal remuneration” during holiday

Holiday pay V

Bear Scotland

  • EAT in Bear Scotland Ltd & Others v Fulton held Employment Rights Act provisions do not meet Working Time Directive
  • Include non-guaranteed overtime
  • By disapplying certain ERA provisions to ensure compatibility
  • But case limited to non-guaranteed overtime not commission

Lock v British Gas

  • The ECJ used their reasoning in Williams’ and held holiday pay should also include contractual commission where based on sales achieved
  • The Leicester Employment Tribunal has therefore now confirmed pay should include:
    • Commission payments; and
    • Non-guaranteed overtime (as per Bear Scotland)

Holiday pay VI

Holiday pay should now include:
Commission payments, incentive bonuses, overtime required (guaranteed or otherwise), overtime premiums, “personal and professional payments”, productivity and performance bonuses, shift allowances, stand-by payments and finally travel allowances treated as taxable remuneration.

Holiday pay VII

Sick leave

  • Holiday entitlement accrues
  • If sickness has prevented leave being taken – can carry over to next year
  • Can take holiday during periods of long term sickness
  • Holiday can be effectively “cancelled” where sickness occurs during leave

Holiday pay VIII


  • Accrues statutory and contractual leave throughout ordinary and additional
  • Should not be lost when crossing a leave year
  • Parental Leave
  • Statutory yes, contractual no

This publication is intended for general summary guidance. It is not and should not be considered legal advice. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.