The Employment Appeal Tribunal has found that people working overtime can claim for additional holiday pay in a landmark ruling.

Currently, only basic pay is counted when calculating holiday pay, but workers have won a ground-breaking decision that means that they can claim for additional holiday pay and make backdated claims for a particular three-month period.

The case was brought by the Unite union, which represented 16 builders and labourers who worked at a project at the West Burton power station site in Nottinghamshire until it came to an end in 2012. The workers consistently worked overtime on the project and received payments for travel time. However, when their holiday pay was being calculated, only their basic rate of pay was taken into account, meaning that the workers received considerably less pay when on holiday, compared to when they were working.

The decision by the Employment Appeal Tribunal upheld the findings of the Employment Tribunal in February, which was appealed by the employers Amec and Hertel.

Unite executive director for legal, membership and affiliated services Howard Beckett commented:

“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.”

The decision will have wide-ranging implications for all companies paying overtime to their staff, with the government estimating that around five million workers are paid overtime and may now be entitled to more holiday pay.

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