This Content Was Last Updated on April 4, 2020 by Jessica Garbett


An overview of recent developments surrounding overtime and holiday pay and shared parental leave.

Overtime and holiday pay

An important decision has been released concerning overtime pay and whether it needs to be included in the holiday pay calculation.

The decision was released by the Employment Appeal Tribunal (EAT); the three cases were:

  • Bear Scotland Ltd & others v Mr David Fulton and others
  • Hertel (UK) Ltd vMr K Woods and others
  • Amex Group Ltd v Mr Law and others.

The crux of the case concerned whether regular non-contractual overtime should be included when calculating holiday pay. The decision by the employment tribunal was appealed by the three appellants (Bear Scotland, Hertel (UK) Ltd and Amex Group Ltd) to the EAT on the basis that it contradicted the view set by the Court of Appeal in Tarmac Roadside Holdings v Peacock [1973] ICR 273. In that decision it was concluded that holiday pay does not have to be included in payment for overtime that the employer is not contractually required to provide an employee.

This case has had a number of interested parties, the Secretary of State for Business Innovation and Skills being one of them who was represented at the EAT.

The EAT upheld the earlier tribunals’ decision which has far-reaching effect and means the UK has failed to implement the Working Time Regulations 1998 (the Regulations) properly. The Regulations would need to be amended to include non-contractual overtime in holiday pay.

The other aspect of the case is the retrospective one; some commentators have suggested this could mean that employees affected by this case could make a claim for unlawful deductions as far back as when they first started working for an employer.

It has been recognised that whichever way this decision went it would have been appealed, so it’s a matter of ‘watch this space’ with an eventual conclusion highly likely to be a European conclusion.

For further details on the case, see our in depth article.

Shared parental leave

As of 1 December 2014 regulations will come into force allowing parents to share parental leave. There are a number of eligibility criteria; however, this is not designed to limit the current rights available.

Mothers will continue to be entitled to 52 weeks’ maternity leave and 39 weeks’ statutory maternity pay or maternity allowance. Provided the eligibility conditions are met a mother can end her maternity leave early and opt for shared paternity leave and share the balance with her partner.

The key date is 5 April 2015: this will only be available for children born on or after 5 April 2015 or for children placed for adoption on or after this date. There are two tests that need to be passed.

  • Continuity of employment test – the person must have worked for the same employer for at least 26 weeks at the end of the 15th week before the week in which the child is due (or at the week in which an adopter was notified of having been matched with a child or adoption) and is still employed in the first week that shared parental leave is to be taken.

  • Employment and earning test – the person must have worked for at least 26 weeks in the 66 weeks leading up to the due date and have earned above the maternity allowance threshold of £30 a week in 13 of the 66 weeks.

For further details see the guidance available from ACAS.

There is also Shared parental leave: a good practice guide for employers and employees.

Finally the portal also covers shared parental leave.

Article shared from ACCA In Practice