Case update (1): Holiday pay – what about voluntary overtime?

holiday pay - deck chairWhat do we already know?

Calculating holiday pay has been made much more complex over the past few years. The Court of Justice of the European Union (CJEU, formally  known as the ECJ), EAT and subsequent Tribunal decisions in Bear Scotland Ltd v Fulton and Lock v British Gas have meant that payments such as commission and bonuses, should now be included in holiday pay. For further detail please see our updates here.  However, there is still uncertainty in respect of voluntary overtime.

In our July 2015 Newsflash Holiday pay – what about voluntary overtime? we updated you on the case of Patterson v Castlereagh Borough Council in which the Northern Ireland Court of Appeal held that, in principle, there is no reason why voluntary overtime should not be included as part of annual leave calculation.

The Court went on to say that it would be a question of fact in each particular case as to whether the voluntary overtime should be included, and this would depend upon whether the overtime is worked with “such regularity so as to become part of the employee’s normal remuneration”.

What’s new?

An English Tribunal has made a similar decision to the Northern Ireland Court of Appeal in the above case.

Summary: In White and others -v- Dudley Metropolitan Borough Council, the Tribunal held that voluntary overtime could be considered part of an employee’s normal pay for the purposes of calculating holiday pay, if it is undertaken with “sufficient regularity”.

Facts:  Tradesmen employed by the Council were regularly invited to work on Saturdays or to go on standby to deal with emergency call-outs.  However, they were not contractually obliged to undertake this work; it was purely voluntary.

The Tribunal held that this system had been in place for such a period and with such regularity that it had become part of their normal work and accordingly part of their normal pay. The consequence of this was that the work had to be included in the calculation of holiday pay for the first 20 days of annual leave (the statutory entitlement under regulation 13 of the Working Time Regulations).

Implications:  This is only a Tribunal level decision and so is not binding on other Tribunals. However, in the meantime, beware that if carried out with “sufficient regularity”, voluntary overtime may properly be described as forming part of “normal remuneration” and should be included as part of annual leave calculation.  We do not yet know whether this decision will be appealed, however, if so, we will hopefully get clarity and guidance on what will constitute “sufficient regularity”.