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.
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52 week history not required
Holiday pay entitlements
Holidays Act 2003