Hi Emma,

We have a few contracted staff who do regular overtime. When they take holidays, we calculate their average wage over the previous 12 weeks, and pay a holiday pay uplift based on this.

I hope that this helps, let me know if you need more info.

Most of our clients have now switched but a few continue to live in hope.
Those that have done so have either gone for P60 earnings or last holiday year earnings and others have done last 12/13 weeks.
The real dilemma is determining who is a regular overtime earner and the easy answer is just to do P^0 or recent average that means even the irregulars get a little extra when they go on holiday
The other problem potentially is those groups with irregular overtime and when it becomes regular! This says to me -just pay it rather than rely on putting a well meaning but confusing bit of law into everyday practice.

In reply to Peter Stanway:

I think Peter's advice is sound. In many cases, the cost and time of setting up detailed ad hoc calculations in time recording and payroll, maintaining the systems to continue to do it correctly, and actually explaining the calculations to staff is probably higher than taking a broad brush approach and applying it to everyone.
Funnily enough, this is exactly what happens in France, where a simple calculation is carried out to establish if average daily earnings over the previous 12 months; if the figure is higher than normal pay, it is used instead of normal earnings for the days in question. The system is much appreciated by shiftworkers and people on commission. All is not perfect over here - many other aspects of french payroll make it one of the most complicated in the world IMHO!

We have moved two groups recently on to receiving rolled-up holiday pay, but there is a third group that might be argued to work regular overtime whom we do not intend to move over. My reasoning is as follows:

In the first two groups, their overtime is sufficiently regular that it can be fairly argued that they are financially disadvantaged by taking holiday. In the third, whilst the overtime is regular, it is distributed in such a way that taking holiday doesn't disadvantage them financially and this is unlikely to change. Essentially: they don't miss out, so shouldn't qualify.

In the two groups that are now getting rolled-up holiday pay, the decision was taken that, rather than calculate a precise value to their additional pay, we would pay a fixed amount based on what we consider to be a business-appropriate amount of overtime worked per day. This isn't technically compliant with the court rulings tha govern this area, but we are a small company and don't really have the wherewithal to make what would be extremely complicated calculations every time an employee in the affected groups takes holiday. We believe that the difference between what we are paying them and what they ought to be paid were we making the expected calculations is small enough to make challenging the arrangement mostly pointless.