Workers have won a ground-breaking case at the Employment Appeal Tribunal to include overtime in holiday pay.
This means some people working overtime could claim for additional holiday pay. Currently, only basic pay counts when calculating holiday pay.
The tribunal also ruled that workers can make backdated claims, but only for a limited period.
However, the ruling could be referred to the Court of Appeal, meaning a final decision may be years away.
The ruling has widespread implications for companies where staff are required to do overtime as a regular part of their job. Lawyers said the tribunal was not clear on whether the ruling applied to workers doing voluntary overtime.
"Up until now, some workers who are required to do overtime have been penalised for taking the time off they are entitled to," said Howard Beckett of the Unite union.
"This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order."
'Matter of urgency'
The tribunal ruled on three cases - road maintenance company Bear Scotland versus Fulton, engineering firm Amec vs Law and industrial services group Hertel vs Wood. The employees won their original claims and the tribunal has now rejected the companies' appeals.
The coalition and business groups had argued strongly that overtime should not be included in holiday pay calculations. They were particularly concerned about a raft of back payments potentially going back many years.
But backdated claims have been limited, with the tribunal ruling that employees cannot claim more than three months after the last incorrect payment.
Businesses are concerned about the extra money they will have to pay out
After the ruling, Business Secretary Vince Cable said he would be setting up a task force to assess the impact of the ruling.
"Government will review the judgment in detail as a matter of urgency," he said.
"To properly understand the financial exposure employers face, we have set up a task force of representatives from government and business to discuss how we can limit the impact on business."
Financial implications
Business leaders were more forthright.
"This is a real blow to UK businesses now facing the prospect of punitive costs potentially running into billions of pounds - and not all will survive, which could mean significant job losses," said CBI director general John Cridland.
"This judgment must be challenged. We need the UK government to step up its defence of the current UK law, and use its powers to limit any retrospective liability that firms may face."
Case studies:
The employee - Shane Brown, Leicester
"I work 35 hours a week as a cleaner but am only contracted to 28 hours.
"Being on near enough minimum wage is bad enough, but to have to push to get one extra day to make ends meet makes life at work very stressful.
"It also makes me less likely to want to take a holiday because no matter what I say or do, I'll be losing out. I can't afford to only be paid for 28 hours for even one week in a month.
"It currently has a massive knock-on effect that means I have to make a choice between eating properly (and by properly, I mean one meal a day as it's all I can realistically afford) or not eating for a couple of days that week just to be able to have some simple pleasure in life.
"Being paid holiday for overtime worked would be extremely useful. It would take a massive weight off my shoulders so if I was to take a holiday, I wouldn't be constantly worrying about how I'm going to make ends meet while I'm off work and I would actually be able to relax."
The employer - Lance Harris, Bristol
"I run a small business employing 27 staff with approximately 18 working regular overtime at one and a half times the normal rate.
"My employees take home far more in wages than if they worked a normal week. This practice has been place more many years, even during the recession.
"If I have to back date a holiday pay supplement, I will curtain overtime working.
"Any such curtailment will hurt everyone but small employers are under great strain from continuous changes to working conditions, contracts, never-ending training, paternity leave, Health & Safety etc.
"Much more of this and I may well bring my retirement plans forward, to the detriment of all staff!"
Given the financial implications for companies, lawyers suggested an appeal was likely.
"The potential financial implications for many employers will be significant," said Jean Lovett, employment and incentives partner at the law firm Linklaters.
"We envisage that the tribunal's decision will not be the last word on this issue. As significant sums are involved, we expect the decision to be appealed."
"Due to the costs involved many employers may now look to reduce the availability of overtime, where feasible."
The cases centre on the interpretation of the EU-wide Working Time Directive, and in particular the Working Time Regulations implemented in the UK in 1998.
The tribunal ruling suggests that UK companies have been interpreting the EU directive wrongly.
Do you work overtime? Are you an employer? Will the holiday pay ruling have an impact on you? You can share your experience by emailing haveyoursay@bbc.co.uk
Unite secures ground breaking tribunal victory over holiday pay
04 November 2014
Unite members, who have been short changed by over a half of their holiday pay, have won a groundbreaking employment appeal tribunal today (Tuesday 4 November), which means all UK employers now need to include overtime pay when calculating workers’ holiday pay.
The case brought by Britain’s largest union, Unite against Amec and Hertel could lead to pay outs worth thousands of pounds and paves the way for similar cases after the appeal tribunal ruled that people obliged to work overtime should have overtime pay and other bonuses and allowances included in their holiday pay.
The 16 Unite members, a mix of electricians, scaffolders and semi-skilled operatives, worked on a project at the West Burton power station site in Nottinghamshire until it came to an end in 2012.
During that time they were consistently required to work overtime and received payments for travel time. Payments for that work were not included in holiday pay, meaning that the workers received considerably less pay when on holiday, compared to when they were working.
The appeal tribunal ruling follows an appeal by Amec and Hertel over an earlier Employment Tribunal decision in February which found in favour of the workers and recent decisions by the European Court that workers should receive normal pay when on holiday.
Unite executive director for legal, membership and affiliated services Howard Beckett said: “Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order.
“Employers will now have to include overtime in calculating holiday pay, and those that don’t should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.
“Once again Unite legal services is leading the challenge to employers and demonstrating to all workers that to receive justice in the workplace you must be in a trade union.
“Unite would like to place on record our thanks to Alys Cunningham of Thompsons Solicitors for the advice and representation given to our members in this matter. Thompsons stand shoulder to shoulder with the trade union movement and have once again shown themselves to be experts in their field.”
ENDS
For further information please contact Unite head of media and campaigns Alex Flynn on 020 3371 2066 or 07967 665869.
Notes to editors
Further background to the case
The law in the UK relating to overtime payments forming part of holiday pay has been strongly against workers since 2004 when the courts, in the case of Bamsey v Albon Engineering and Manufacturing Plc [2004] IRLR457, held that overtime pay should only be included in workers’ holiday pay if the employer was required to give the workers overtime. In reality this is often not the case and, whilst many workers’ contracts require them to work overtime if the employer wants them to, this usually does not work both ways, and employers are not normally required to give workers overtime.
From 2004 until now, this had meant that if workers were obliged to work overtime they didn’t get the pay for that overtime included in their holiday pay and instead received their basic pay only. For some workers this meant they received less than half their normal pay when they were on holiday.
The employment appeal tribunal in Hertel (UK) Ltd v Mr Wood & Others UKEAT/0160/14/SM; and Amec Group Ltd v Mr Law & Others UKEAT/0161/14/SM confirmed their decision relating to this in the case.
The appeal tribunal has ruled that the decision in the Bamsey case was wrong and where workers are regularly required to work overtime, the overtime pay should be included in their holiday pay under European Law.
The case brought by Britain’s largest union, Unite against Amec and Hertel could lead to pay outs worth thousands of pounds and paves the way for similar cases after the appeal tribunal ruled that people obliged to work overtime should have overtime pay and other bonuses and allowances included in their holiday pay.
The 16 Unite members, a mix of electricians, scaffolders and semi-skilled operatives, worked on a project at the West Burton power station site in Nottinghamshire until it came to an end in 2012.
During that time they were consistently required to work overtime and received payments for travel time. Payments for that work were not included in holiday pay, meaning that the workers received considerably less pay when on holiday, compared to when they were working.
The appeal tribunal ruling follows an appeal by Amec and Hertel over an earlier Employment Tribunal decision in February which found in favour of the workers and recent decisions by the European Court that workers should receive normal pay when on holiday.
Unite executive director for legal, membership and affiliated services Howard Beckett said: “Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order.
“Employers will now have to include overtime in calculating holiday pay, and those that don’t should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.
“Once again Unite legal services is leading the challenge to employers and demonstrating to all workers that to receive justice in the workplace you must be in a trade union.
“Unite would like to place on record our thanks to Alys Cunningham of Thompsons Solicitors for the advice and representation given to our members in this matter. Thompsons stand shoulder to shoulder with the trade union movement and have once again shown themselves to be experts in their field.”
ENDS
For further information please contact Unite head of media and campaigns Alex Flynn on 020 3371 2066 or 07967 665869.
Notes to editors
Further background to the case
The law in the UK relating to overtime payments forming part of holiday pay has been strongly against workers since 2004 when the courts, in the case of Bamsey v Albon Engineering and Manufacturing Plc [2004] IRLR457, held that overtime pay should only be included in workers’ holiday pay if the employer was required to give the workers overtime. In reality this is often not the case and, whilst many workers’ contracts require them to work overtime if the employer wants them to, this usually does not work both ways, and employers are not normally required to give workers overtime.
From 2004 until now, this had meant that if workers were obliged to work overtime they didn’t get the pay for that overtime included in their holiday pay and instead received their basic pay only. For some workers this meant they received less than half their normal pay when they were on holiday.
The employment appeal tribunal in Hertel (UK) Ltd v Mr Wood & Others UKEAT/0160/14/SM; and Amec Group Ltd v Mr Law & Others UKEAT/0161/14/SM confirmed their decision relating to this in the case.
The appeal tribunal has ruled that the decision in the Bamsey case was wrong and where workers are regularly required to work overtime, the overtime pay should be included in their holiday pay under European Law.
Shift work dulls your brain - report
Working antisocial hours can prematurely age the brain and dull intellectual ability, scientists warn.
Their study, in the journal Occupational and Environmental Medicine, suggested a decade of shifts aged the brain by more than six years.
There was some recovery after people stopped working antisocial shifts, but it took five years to return to normal.
Experts say the findings could be important in dementia, as many patients have disrupted sleep.
The body's internal clock is designed for us to be active in the day and asleep at night.
The damaging effects on the body of working against the body clock, from breast cancer to obesity, are well known.
Now a team at the University of Swansea and the University of Toulouse has shown an impact on the mind as well.
Three thousand people in France performed tests of memory, speed of thought and wider cognitive ability.
The brain naturally declines as we age, but the researchers said working antisocial shifts accelerated the process.
Those with more than 10 years of shift work under their belts had the same results as someone six and a half years older.
The good news is that when people in the study quit shift work, their brains did recover. Even if it took five years.
'Substantial decline'
Dr Philip Tucker, part of the research team in Swansea, told the BBC: "It was quite a substantial decline in brain function, it is likely that when people trying to undertake complex cognitive tasks then they might make more mistakes and slip-ups, maybe one in 100 makes a mistake with a very large consequence, but it's hard to say how big a difference it would make in day-to-day life."
He said he would not do night shifts "if I could possibly help it" but they were a "necessary evil" that society could not do without.
"There are ways to mitigate the effects in the way you design work schedules and regular medical check-ups... should include cognitive performance tests to look for danger signs," he added.
Dr Michael Hastings, from the UK Medical Research Council's Laboratory of Molecular Biology, told the BBC: "The reversibility is a really exciting finding because no-one else has shown it and no matter how compromised a person may be there's always hope of recovery."
He said the findings may have important consequences in dementia, which is known to damage sleeping patterns in a similar way to shift work.
"If you can keep the sleep-wake cycle as solid as possible you're unlikely to reverse neurodegeneration, but you can ameliorate one of the consequences.
"In nursing homes one thing you can do to help is to set a very clear daily routine to encourage a sensible 24-hour pattern of activity; it needs bright lights in the day, resting at night and appropriate medication such as melatonin before bed."
Prof Derk-Jan Dijk, from the Surrey Sleep Centre, cautioned that retired shift workers still had lower sleep quality than people who had never done nights.
"So some of these effects may not be so readily or rapidly reversed."
He added: "We now accept that shift work may not be good for your physical health, but this shows your brain function is affected, and I think that finding will surprise many people."
Do you work shifts? What do you think of the findings in this study? You can share your experience by emailinghaveyoursay@bbc.co.uk If you are willing to be contacted by a BBC journalist, please leave a contact number.
SON: "Daddy, may I ask you a question?"
DAD: "Yeah sure, what is it?"
SON: "Daddy, how much do you make an hour?"
DAD: "That's none of your business. Why do you ask such a thing?"
SON: "I just want to know. Please tell me, how much do you make an hour?"
DAD: "If you must know, I make £20 an hour."
SON: "Oh! (With his head down).
SON: "Daddy, may I please borrow £10.00?"
The father was furious.
DAD: "If the only reason you asked that is so you can borrow some money to buy a silly toy or some other nonsense, then you march yourself straight to your room and go to bed. Think about why you are being so selfish. I work hard everyday for such this childish behavior."
The little boy quietly went to his room and shut the door.
The man sat down and started to get even angrier about the little boy's questions. How dare he ask such questions only to get some money?
After about an hour or so, the man had calmed down, and started to think:
Maybe there was something he really needed to buy with that £10 and he really didn't ask for money very often. The man went to the door of the little boy's room and opened the door.
DAD: "Are you asleep, son?"
SON: "No daddy, I'm awake".
DAD: "I've been thinking, maybe I was too hard on you earlier. It's been a long day and I took out my aggravation on you. Here's the £10 you asked for."
The little boy sat straight up, smiling.
SON: "Oh, thank you daddy!"
Then, reaching under his pillow he pulled out some crumpled up notes. The man saw that the boy already had money, started to get angry again. The little boy slowly counted out his money, and then looked up at his father.
DAD: "Why do you want more money if you already have some?"
SON: "Because I didn't have enough, but now I do.
"Daddy, I have £20 now. Can I buy an hour of your time? Please come home early tomorrow. I would like to have dinner with you."
The father was crushed. He put his arms around his little son, and he begged for his forgiveness. It's just a short reminder to all of you working so hard in life. We should not let time slip through our fingers without having spent some time with those who really matter to us, those close to our hearts. Do remember to share that £20 worth of your time with someone you love? If we die tomorrow, the company that we are working for could easily replace us in a matter of days. But the family and friends we leave behind will feel the loss for the rest of their lives. And come to think of it, we pour ourselves more into work than to our family.
Some things are more important.
DAD: "Yeah sure, what is it?"
SON: "Daddy, how much do you make an hour?"
DAD: "That's none of your business. Why do you ask such a thing?"
SON: "I just want to know. Please tell me, how much do you make an hour?"
DAD: "If you must know, I make £20 an hour."
SON: "Oh! (With his head down).
SON: "Daddy, may I please borrow £10.00?"
The father was furious.
DAD: "If the only reason you asked that is so you can borrow some money to buy a silly toy or some other nonsense, then you march yourself straight to your room and go to bed. Think about why you are being so selfish. I work hard everyday for such this childish behavior."
The little boy quietly went to his room and shut the door.
The man sat down and started to get even angrier about the little boy's questions. How dare he ask such questions only to get some money?
After about an hour or so, the man had calmed down, and started to think:
Maybe there was something he really needed to buy with that £10 and he really didn't ask for money very often. The man went to the door of the little boy's room and opened the door.
DAD: "Are you asleep, son?"
SON: "No daddy, I'm awake".
DAD: "I've been thinking, maybe I was too hard on you earlier. It's been a long day and I took out my aggravation on you. Here's the £10 you asked for."
The little boy sat straight up, smiling.
SON: "Oh, thank you daddy!"
Then, reaching under his pillow he pulled out some crumpled up notes. The man saw that the boy already had money, started to get angry again. The little boy slowly counted out his money, and then looked up at his father.
DAD: "Why do you want more money if you already have some?"
SON: "Because I didn't have enough, but now I do.
"Daddy, I have £20 now. Can I buy an hour of your time? Please come home early tomorrow. I would like to have dinner with you."
The father was crushed. He put his arms around his little son, and he begged for his forgiveness. It's just a short reminder to all of you working so hard in life. We should not let time slip through our fingers without having spent some time with those who really matter to us, those close to our hearts. Do remember to share that £20 worth of your time with someone you love? If we die tomorrow, the company that we are working for could easily replace us in a matter of days. But the family and friends we leave behind will feel the loss for the rest of their lives. And come to think of it, we pour ourselves more into work than to our family.
Some things are more important.