Historically, holiday pay has been calculated on ‘normal basic pay’ and that’s made sense when the 40 hour week was the ‘norm’. However, in the new world where people are on zero hour contracts, part time contracts with extra hours regularly worked, flexible hours etc it seems sensible for people’s holiday pay to be calculated on the basis of the hours they actually work.
Once, this would have meant a lot of manual record keeping and calculation – but in the days of cloud-based time recording and HR systems, it is not that difficult to give everyone holiday pay based on the hours they actually worked over the previous 3 months.
Equality and flexibility
We have got used to the idea that we need to take proper account of statutory holidays when dealing with part time workers (who once used to miss out on any holidays that fell on days they did not usually work).
The courts have already decided that part time women can compare their pay with full time men who are working the same number of hours.
It is not a big leap of imagination to see that the calculation of holiday pay in relation to hours worked could have similar implications.
It changed earlier
Holiday pay is no longer automatically calculated on the basis of ‘basic pay’ as British Airways pilots contested this year’s ago and got their flight bonuses included.
Holiday pay changes
Now it seems, from an Employment Appeal tribunal decision that has just been published, that holiday pay can no longer be calculated on the basis of ‘basic hours’ where workers are required and regularly working overtime, but ought to be calculated on ‘normal pay’.
Where will it end?
Wouldn’t it make more sense to simply accumulate holiday pay for each hour worked? There’s little doubt that the latest decision is going to be appealed to the higher courts. The legal arguments and the fine distinctions may run on, but it seems that the writing is clearly on the wall for any other method!!