Holiday Pay Update


Following on from my previous article relating to changes on how holiday pay should be calculated:, there is now further guidance for employers that follows from a case recently decided by the Court of Appeal in Northern Island. Although the decision in Patterson v Castlereagh Borough Council is not binding in England and Wales, the case will still be relied on as a useful precedent by legal professionals during litigation and will inevitably be used as a persuasive authority.

Following appeal, the case has clarified that voluntary overtime should be taken into consideration when calculating the amount of holiday pay due to an employee. This was something that was unclear following the Bear Scotland Ltd v Fulton case, so the clarification has been welcomed by all HR and Employment law professionals.

This is obviously more crippling news for employers who should carefully consider their staffing requirements and not just automatically rely on overtime clauses to cover those busy periods where demand is unknown. Forward planning is a necessity in light of these recent changes so that employers can budget and ensure financial viability for their businesses.

Professional advice should be sought if you are unsure as to what payments need to be taken into consideration when paying an employee’s annual leave. Although in my previous article, I have indicated the elements of an employee’s pay that should be taken into consideration when calculating holiday pay, this list is non-exhaustive and other payments may exist which need to be included.

Related article:

Holiday pay: what it means for you:

Nitu Patel

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