Holiday Pay for Overtime

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We are often asked whether holiday payments should be made in relation to overtime hours worked. Generally, holiday pay is based on a week’s pay, ie the amount of pay a worker would expect to earn during a normal working week. For workers whose hours and pay vary from week to week, holiday pay is based on their average weekly earnings during the 12-week period leading up to the date when their holiday begins. For a salaried employee, a week’s pay is generally their annual salary divided by 52 weeks in the year. In the case of an employee who normally works a 37.5 hour week, Monday to Friday, they would be entitled to a statutory minimum holiday entitlement of 5.6 weeks or 28 days (which can include the eight public holidays). If they work a few hours’ overtime each week, these would not normally need to be taken into account when calculating holiday pay. The only exception to this would be where overtime hours are a contractual requirement and you are contracted to provide a specific number of overtime hours which they are required to work each week. In this situation, the overtime hours become part of the normal working hours as there is a contractual obligation on both sides.

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