Should Voluntary Overtime Be Included When Calculating Holiday Pay?

Author:Ms Eleanor J. Winslet
Profession:Reed Smith
 
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Another decision has been handed down to clarify - or complicate - the position on which aspects of pay should be included when calculating an employee's entitlement to holiday pay.

The Court of Appeal in Northern Ireland ("CA") has held that voluntary overtime is not necessarily excluded from the calculation of holiday pay for the purposes of the Working Time Regulations 1998 (as derived under the EU Working Time Directive).

The case of Patterson v Castlereagh Borough Council held that it was a "question of fact" for each Tribunal to determine whether or not voluntary overtime was "normally" carried out by the employee. If so, it should be considered to be part of the employee's "normal remuneration" and included when calculating holiday pay.

The case was remitted to the Tribunal to hear further evidence of the overtime actually worked by the employee within a suitable reference period. Once this is determined, the Tribunal will decide as a question of fact whether the voluntary overtime should be included in this particular case.

Background

There have been a number of recent cases about the scope of holiday pay and how this should be calculated. In brief:

Williams and others v British Airways plc - held that holiday pay should not be calculated by reference to basic salary, but should correspond to "normal remuneration".

Lock v British Gas Trading Limited - held that holiday pay under the Working Time Directive cannot be calculated on basic pay alone where remuneration also includes commission. Please see the link to our previous blogs on this case here and here.

Bear Scotland Limited v Fulton and another - held that there should be an intrinsic or direct link between holiday pay and the work the worker is obliged to carry out. It was held that "non-guaranteed overtime" (i.e., where employees were required to work, but which employers were not obliged to offer) should be included when calculating holiday pay. Please see the link to our blog here.

Whether voluntary overtime should be included in holiday pay calculations was not dealt with in the Bear Scotland case at EAT stage, and so the position remained unclear on this point. However, at the Tribunal stage for Bear Scotland, the Tribunal found that overtime that could be refused should be included in the calculation of statutory holiday pay, and it has been suggested in commentary that whether this should be included is fact-specific.

What was considered in the Patterson case?

At the...

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