HM Insights

Over time, the overtime issue has not gone away in holiday pay saga

We’ve been consistently blogging on the developments over the past two years or so on the contentious issue of the calculation of holiday pay (most recently here).

However, there’s been no let up in the case law and challenges. Readers will no doubt recall the Bear Scotland case (a summary can be found here) that dealt with how overtime should be considered for the purposes of calculation of holiday pay.

The decision in this case left a cliff-hanger question – does purely voluntary overtime fall within the calculations for holiday pay?

This was answered with a “no reason why not” last year in Northern Ireland in the Patterson v Castlereagh Borough Council case, and has now been answered with a (fact dependent) “yes” from an employment tribunal in the case of White & Others v Dudley Metropolitan Borough Council.

Details of the case

This decision should be treated with caution, as it is at first instance, not appellate, level, and therefore is not binding on any other employment tribunal.

It is, though, perhaps a useful pointer as to how tribunals may be minded to treat claims relating to voluntary overtime.

The case concerned tradesmen who worked for a local authority and who had taken the decision to work on a Saturday at their own discretion, not at the authority’s compulsion. A voluntary standby rota for emergency callouts was also operated, with payments made for being on this rota out of hours and for callouts attended. The authority did not take into account these extra hours worked when calculating entitlement to holiday pay. This was on the basis that these were not contractual payments, as the overtime was entirely voluntary and could not be compelled in the contract of employment.

Further to the Bear Scotland case, claims were raised on behalf of 56 of the tradesmen, who alleged that the exclusion of these payments from the calculation was in breach of the Working Time Regulations. The employment tribunal agreed, holding that providing this work was done with “sufficient regularity” it was able to be regarded as part of an employee’s normal remuneration, and so fell within the calculation for holiday pay under the Regulations relating.

What are the implications of this case for employers?

It will be interesting to see if the local authority will appeal this decision, and we get to see appellate level consideration of this proposition. If so, will it answer what is “sufficient regularity” or will this be left open to interpretation? Whilst we may await such authoritative determination, from this and the previous decisions, it seems as if the tribunals are going to be sympathetic to including voluntary overtime in the calculations

Get in touch

If you want to discuss holiday pay and the implications of the recent case law for your business, please contact one of our employment team.