Your Holiday Pay Should Include Overtime — Are You Being Shortchanged?

Holiday pay is one of the most commonly underpaid employment rights in the UK. Many workers are still being paid only their basic salary when they take holiday — even though the law requires overtime, commission, and regular shift premiums to be included. Here's what the law says and how to check if you're affected.

What the Law Actually Says

Under the Working Time Regulations 1998 (implementing the EU Working Time Directive), workers are entitled to 4 weeks of "European" holiday paid at their normal rate of pay. UK courts have consistently ruled that "normal pay" includes:

• Regular compulsory overtime
• Regular voluntary overtime (if worked consistently)
• Commission and performance bonuses that are intrinsically linked to the role
• Shift premiums and allowances that are paid regularly

Who Is Commonly Underpaid?

• NHS and other healthcare workers with regular bank shift supplements
• Construction and manufacturing workers with regular overtime
• Sales roles with regular commission
• Retail workers who regularly work Sundays or nights for premium rates

How to Check If You're Affected

1. Review your payslips for the 12 weeks before a holiday period
2. Calculate your average weekly pay including overtime and other elements
3. Compare this to what you were paid on your holiday payslip
4. If holiday pay is lower, the difference is what you may be owed

Backdating Claims

Claims for unpaid holiday pay can be brought at an Employment Tribunal. However, after the Supreme Court ruling in Bear Scotland v Fulton (2014) and subsequent cases, there are time limits. You must generally bring a claim within 3 months of the underpayment. Series of deductions can be linked, but gaps of more than 3 months between underpayments can break the chain.

Frequently Asked Questions

My employer says they've always paid this way. Are they right?

No. The case law is clear, and HMRC's guidance has been updated multiple times to reflect it. "We've always done it this way" is not a legal defence for underpayment.

What should I do if I think I'm underpaid?

First, raise it informally with your payroll or HR department. If unresolved, contact ACAS for early conciliation before bringing a tribunal claim. Use our Holiday Pay Calculator to calculate the gap.