The Advisory, Conciliation and Arbitration Service has produced revised guidance on overtime which takes account of recent court decisions that have indicated that all overtime worked should normally be included when calculating a worker's statutory holiday pay entitlement for the four weeks' annual leave required under the EU Working Time Directive (WTD). The exception to this is overtime that is worked on a genuinely occasional and infrequent basis so that it does not qualify as 'normal remuneration'.
The guidance examines the following topics:
- The difference between voluntary, compulsory and guaranteed, and compulsory but not guaranteed overtime;
- Ensuring compliance with the Working Time Regulations 1998 as regards how much overtime can be worked;
- Pay when working overtime;
- Overtime for part-time workers; and
- The impact of overtime on holiday pay calculations.
There are also links to further information on working hours, the National Minimum Wage and calculating holiday pay.
Whether a worker is required to work overtime depends on their contract of employment. The precise terms governing the practice should either be included in the contract itself or set out in the staff handbook.
As the statutory leave entitlement in the UK is 5.6 weeks, many employers find it easier to also include overtime when calculating holiday pay for the extra annual leave over and above the minimum entitlement under the WTD, even though they are not legally obliged to do so, as it makes the process simpler and easier to understand.
The detailed guidance can be found at http://www.acas.org.uk/index.aspx?articleid=4249
For help or advice on this or other related employment law matter, please contact us on 0121 746 3300.
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