Travel firms are being urged to review staff holiday pay to ensure it includes commission and overtime under new employment law.
Since January 1, 2024, staff are entitled to ‘normal pay’ rather than ‘basic pay’ for at least four weeks’ of their total annual leave.
For any further leave, it is currently at the employer’s discretion as to whether they pay normal or basic as the level of holiday pay.
More: Comment: Are you getting holiday pay right?
Normal pay includes commission, which for travel firms could be for selling holidays, or regular overtime payments, and represents the money employees are paid when they are working.
Any firms paying overtime, commission or other allowances to staff must now ensure they are factoring these payments into employees’ holiday pay.
According to travel lawyer Ami Naru, most travel firms are not paying normal pay to staff during holidays and could be liable for two years’ backpay under the new law.
Naru, partner and head of employment at Travlaw, urged firms to carry out holiday pay audits, recalculate pay, and work out their potential exposure to backdated claims now the EU case law has been written into UK legislation from the start of this year.
She said: “Holiday pay has to reflect commission that staff would normally get.
“Burying your head in the sand delays the inevitable. All that will do is increase potential liability in future as employees can claim backdated pay going back two years.”
The new law follows the adoption of EU employment law into UK law. Although paying normal pay has been case law in recent years within the EU, it was unclear until recently whether this obligation would be retained to become part of UK law post-Brexit.