Holiday pay: how court rulings may affect you

The Working Time Regulations 1998 (WTR) give employees and workers the right to take four weeks paid holiday a year. The four weeks were later extended to 5.6 weeks and can include bank and public holidays. Holiday pay is based on a week's normal pay. The concept of a week's normal pay has been tested before the courts over the years and originally most employers based holiday pay on basic contracted hours i.e. not including overtime.

In 2004, in Bamsey & Ors v Albon Engineering & Manufacturing Plc, an employee argued that as he regularly worked overtime, the overtime should be included in the calculation of a week's pay. At the time, the Court of Appeal said that when calculating workers' holiday pay, employers do not have to include overtime working in holiday pay, unless it is contractual.