This means that those working voluntary overtime could claim for additional holiday earnings. The current process allows only basic pay to be counted when calculating holiday entitlements, meaning that millions of workers could be entitled to extra holiday pay.
The tribunal also ruled that workers can make backdated claims, but only for a limited period. However, the ruling may be called to the Court of Appeal, meaning that a final decision could be years away.
“Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to,” said Howard Beckett of the Unite union.
“This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order.”
The case comes with widespread implications for all companies which have staff doing overtime as a regular part of their job.
The coalition and business groups had argued strongly that overtime should not be included in holiday pay calculations. They were particularly concerned about a raft of back payments potentially going back many years.
But backdated claims have been limited, with the tribunal ruling that employees cannot claim more than three months after the last incorrect payment.
After the ruling, Business Secretary Vince Cable said he would be setting up a task force to assess the impact of the ruling.
“Government will review the judgment in detail as a matter of urgency,” he said.
“To properly understand the financial exposure employer’s face, we have set up a task force of representatives from government and business to discuss how we can limit the impact on business.”
In view of these financial implications, it has been suggested that an appeal is likely.