In a landmark ruling, the Supreme Court has handed down a decision that clarifies and strengthens the rights of workers when it comes to calculating holiday pay. The ruling, which has far-reaching implications for both employers and employees, ensures that holiday pay is based on a broader definition of earnings, providing more financial security to workers.

The Supreme Court's decision establishes that holiday pay should be calculated based on an average of a worker's earnings over a more extended reference period. Instead of merely considering a basic salary, it should include various elements such as overtime, commission, and other regular payments that are intrinsically linked to the worker's role.

This decision is a significant victory for workers, as it ensures that they receive fair compensation for taking time off work. The inclusion of additional elements in holiday pay calculations means that employees will not be financially penalised for taking leave, and they can enjoy their time off without worrying about a reduced income.

While this ruling may pose some challenges for employers, it also offers greater clarity and consistency in the calculation of holiday pay. Employers will need to review their payroll systems and ensure that they comply with the new requirements. By adhering to these new requirements, they can promote fairness in their business and retain motivated and satisfied employees.

This ruling not only benefits individual workers but also contributes to a more equitable and just work environment overall.

At GS Verde Law, we can provide you with further guidance on calculating holiday pay, as well as every other element of the employment relationship, from notice periods, redundancies and TUPE to disciplinary procedures, the Equality Act, and whistleblowing.

To learn more about how we can provide you with a comprehensive and streamlined service in all matters relating to employment law, get in touch with our team here