This is a really useful article from Farmers Weekly for those employers trying to get their heads around the recent changes on calculating holiday pay with overtime. The grey box to the right of the article is a particularly clear summary.

It is important to bear in mind that the changes to calculating holiday pay do apply to all employers. However, the reality is that industries that provide overtime to their workers more frequently are going to be hit hardest, such as farmers during harvest.

One of the practical difficulties of this ruling is that, as things stand, holiday pay is calculated using the average of a worker’s previous 12 weeks’ pay. This means that if a worker took holiday directly after a busy period where they worked a lot of non-guaranteed overtime, their holiday pay is likely to be significantly higher than if they took it during a quiet time of the year.

What would be helpful to employers administratively is if the calculation could be averaged over a period of 12 months rather than 12 weeks, which might help to prevent savvy workers from scrambling to take holiday straight after a busy schedule. It would also be useful to have a clear ruling or guidance as to whether or not “voluntary overtime” ought to be included within holiday calculations too.