Holiday taken reducing overtime pay. Is this legal?

[AllDruggedUpWithNowhereToGo]

I’m looking for some advice/guidance.

Basically last month I have been paid for my standard hours (162.5) but instead of getting paid my full amount of worked overtime, they have deducted the holiday hours I used that month from the 15 hours of overtime I had accrued over the month.

So my payslip reads

hours worked - 162.5 - standard rate
holiday hours - 10 - standard rate
overtime hours - 5 - 1.5x standard rate

Can they do this? As it seems unfair and like I am being penalised for taking holiday.

If they’ve taken holiday from your overtime then you’ve not received your statutory holiday allowance. That is illegal

This all sounds a bit dodgy op. Not you. Them.

on your payslip, do you pay tax? NI?

so go in with a handful of past pay slips showing that this has never happened before!

But OP has been paid for the extra 15 hours, but she's only been paid the enhanced rate for 5 hours, because she only worked 5 hours above her contracted hours, with the other hours being holiday hours, which are paid at standard rate.

So, if she hadn't worked overtime, she would have been paid 152.5 worked hours, plus 10 holiday hours, a total of her normal 162.5 hours all at standard rate.

Instead, she's been paid 162.5 hours (standard rate) plus 10 holiday hours (standard rate), plus 5 overtime hours (enhanced rate), a total of 177.5 hours.

The reason why only 5 hours were enhanced is because that is all that the OP worked over her standard contracted hours. The first 162.5 hours worked are paid at standard rate, annual leave is paid at standard rate.

In my experience employers who pay an enhanced rate for overtime only pay the enhanced rate for hours worked over the normal amount and holiday hours don't count towards that and are always paid a standard rate. BUT, this should be reflected in the contract in one way or another.

Yup I pay tax and NI, everything is above board in that respect, they just never got around to sorting the contracts.

Holiday allowance that's been taken, counts as time worked with regards to overtime, maternity pay, notice etc.

If your company policy is that you don't get overtime on hours under your monthly hours, but instead get time in lieu, then those hours would need to be added back to your holiday allowance, and you would know in future to never work any overtime in months when you take holiday. By the sounds of it, this is not how things have been done before.

I would go in calmly and ask her to explain how she's arrived at these figures. If she says that overtime is only paid on hours actually in work, point out that your annual leave is considered hours worked. Otherwise the first 10 hours of your overtime was you working through your annual leave. Then they either need to pay you properly for the overtime, or they refund you your holiday allowance so you can take it another time.

But she's not working through her holiday? Or being given TOIL.

Her contract probably says (because this is the standard, entirely legal way to word it) that the first 162.5 hours worked in a pay period are paid at standard rate. Annual leave is paid at standard rate. Hours worked above 162.5 are paid at enhanced overtime rate.

Therefore pay would be 167.5 hours worked in total - the first 162.5 paid at standard rate, the extra 5 at the enhanced rate. PLUS 10 hours holiday pay at standard rate, as annual leave is always paid at standard rate. Total of 177.5 hours paid, which is correct. The reason that only 5 of them are at enhanced rate is because she only worked 5 hours above her contracted 162.5 hours in the pay period, so only 5 hours qualify for the advanced rate. Annual leave hours are not enhanced, and are only paid at standard rate.

As a separate issue, if OP is only given statutory holidays, the number of days annual leave (paid at standard rate) should be adjusted to take into account the amount of overtime she works. On an average of an extra 15 hours a month, she'd probably get a couple of extra days of statutory leave entitlement in the year.

I thought OP meant she had worked her normal basic hours apart from the holiday which forms part of her normal basic hours then worked an extra 15 hours.

The holiday should be entered as part of the basic hours.

If you are paid monthly and took a week off on annual leave but did a lot of overtime on the other weeks you wouldn't lose your overtime hours rate because you have been on holiday for a week.

@mrsm43s

@MangoBiscuit is correct

I am confused, presumably you completed your contracted hrs part of which was annual leave and then you did 15 hrs overtime?

I’m also confused. I am/was assuming that my holiday taken was part of my standard hours… and overtime was overtime.

The issue is about half of the holiday taken was because I had hit a quiet point of the day so left an hour or two early, if they are going to penalise me for this I will sit at work and read a book and save my holiday for when it benefits me… and still get overtime when we have tight deadlines.

Did she know it was a holiday? Did you fill in a holiday request? If she thought it was unpaid leave then she is correct. If it was a holiday coming out of your holiday entitlement then she is incorrect.

I take my last post back.

She is incorrect.

Op

I am baffled that you are pursuing this but not bothered about fact you have worked for 3 years for this company and they haven’t got round to providing you with a contract.

i think you need to channel you energy in to getting a contract! Benefits? Pension? Notice period? Disciplinary approach? Maternity pay? Sick pay? And…. Holiday pay!!

The default is that holiday is treated as time worked. If your overtime is fairly regular, you'll also have a case that your usual overtime should be included in your holiday pay under recent case law - holiday pay must reflect your 'normal' wages including overtime, commission etc.

They're trying to have their cake and eat it here by getting your leave at the basic rate then also your overtime (over the leave + time worked) at the basic rate.

I'd try to get a call in with ACAS before you speak to payroll woman; if she digs her heels in I'd point out that as the financial benefit to you in doing overtime in months where you take leave is so much less, you'll be declining it in those months in future.

@AllDruggedUpWithNowhereToGo

I hope you get on OK.

No further update… payroll woman has told me as it’s month end she is far too busy to explain to me how I am wrong and she might have time by the middle of next week!

I’m not sure what I do now…

That is disgusting. It won't take that much time. It doesn't matter if she is right or wrong. A professional payroll person would want the employee to understand how she has worked the payroll out.

& admit any errors.

Call ACAS. You can then email her with the information they give you, setting out why she's wrong.

I mean she's shot the company in the foot here. If you regularly do overtime, your holiday pay should reflect the usual level of pay you get including your overtime, so by trying to shortchange you she may have ended up costing the company more if they have to pay you properly.

Speak to acas and or a law centre and get an email written up quoting the law and the source of the information. Be very clear that “direct gov.uk states ………..” so that there is a source for her to check against. I would also point out that you were offered 15 hours of paid overtime at the overtime rate and that had you been made aware it would be standard rate you would not have agreed to do the hours.

The very first question ACAS will ask is

”have you referred to your contract”
and the Op will say - no contract despite working there 3 years
they will then ask if anything in writing as “At the very least, the law requires that all employers provide written details of the main terms of employment to employees on day one of them taking up their position.” And it would seem the op would have to say no.

I would be very very surprised if this company is paying tax etc correctly.

op - you are with a very very poorly administered company. I think this issue for one month is the least of your problems