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What rate should my holiday pay be set at?
You are entitled to be paid at the rate of a week's pay in respect of each week of leave.
If you are a time worker, the calculation of a week's pay is relatively straightforward. It is simply your normal remuneration for working your normal working hours in the week.
For piece workers, a week's pay is the average pay a worker received over the previous 12 week-period in which they were paid.
For workers with no normal working hours, a week's pay is the average weekly remuneration over a 12-week period including all pay and hours worked.
Trade unions have fought several important court cases, changing the law on the calculation of holiday pay. As a result, it is now established that holiday pay must include all the different elements that make up your normal pay and, which you would have you would have earned if you had been working instead of on holiday. This includes, for example:
- Guaranteed and regular non-guaranteed overtime payments;
- Travel time payments;
- Shift or weekend premium payments;
- Anti-social hours payments;
- Results-based commission (for example, where some of your pay is based on sales you have secured for your employer).
- If your normal pay includes sales commission, your holiday pay must include an element to reflect the commission you would have earned had you been at work generating sales and not on holiday.
The basis for the ruling that your holiday pay must be the same as your normal wages is that the ability to take holiday is an important aspect of the law protecting workers' health, safety and welfare. Workers should not be deterred from taking holiday by being paid less when on holiday than they would normally earn if they were working.
It is against the law to pay you basic pay only when you are on holiday if your normal pay includes other components.