DOD’s blog: The holiday pay debacle

Debi O'Donovan, editor, Employee Benefifts

Unless you have been hiding under a rock this week, you will be fully aware that on 4 November the Employment Appeal’s Tribunal (EAT) has made a hugely significant ruling about how holiday pay is calculated.

Every law firm in the country, along with several unions, were quick to issue email newsletters about the ruling. My email inbox took a pounding on Tuesday.

But, if you scanned to the bottom of each one, they invariably said one thing: wait for the appeal.

Speaking to a number of large employers while at a Red Letter Days event last week I got the feeling that most genuinely feel the employees do not expect this extra pay.

Annual basic pay levels are where they are because employers have taken into account that staff take holiday. Change the calculation and pay increases will be suppressed until a new equilibrium is reached.

We are only in this situation because of the way Britain drafted the Working Time Directive back in the late 1990s (it came into effect in 1998). This is a legal glitch, not a state of massive unfairness.

And it could have broader ramifications, such as pushing up pension contributions.

Anyone who reads my blog will know that I am quick to point out pay unfairness. This is not such an occasion.

So I will also be on the ‘wait and see’ bench when the appeal is made.

Let’s hope a decision is made that doesn’t damage organisations throughout the UK.

Debi O’Donovan


Employee Benefits 

Twitter: @DebiODonovan