|  |
Holiday pay not required on redundancy payments
Question
I operate a small business and recently made one of my workers redundant.
I paid her holiday pay based on 6% of her salary.
She now claims that holiday pay is also payable on the redundancy compensation she was paid. Is this correct?
Answer
Holiday pay is payable on
- Salary or wages.
- Allowances (except reimbursing non-taxable allowances).
- Commission.
- Contractual bonuses.
- Holiday pay received during the relevant period such as annual holidays or public holidays.
Holiday pay is not payable on
- Bonuses, gratuities, or any other lump sum special payment that the employer is not contractually bound to pay to the worker.
- Any pay a worker receives for any complete week off work because of sickness, injury, or voluntary military service.
- Reimbursing non-taxable allowances such as meal and clothing allowances and tool money.
Holiday pay is also not payable on redundancy compensation or severance pay because it lacks the periodic characteristic of a wage payment, and is not an allowance.
See Also
Redundancy pay not required unless written in contract.
| Alphabetical Index | Case Law |  |
Cashing up holiday pay
Annual compulsory closedowns Other Leave Sections
|
|
Holidays Act 2003