Holiday Pay – It looks like voluntary overtime will make the cut

Background

David Ward

David Ward

As previously covered in my blog on 4 November 2014, recent case law now stipulates that regular non-guaranteed overtime should be included in holiday pay calculations. In these
cases, such as Bear Scotland Ltd and others v Fulton and others, the overtime in question was related to tasks which the employees were contractually obliged to perform.

This has prompted the question as to whether paid annual leave should also cover voluntary overtime which the worker chooses but is not obliged to do.

Refresher: Patterson v Castlereagh Borough Council

In the case of Patterson v Castlereagh Borough Council, a Northern Irish Industrial Tribunal rejected the holiday pay related unlawful deductions from wages claim brought by Mr Patterson. It ruled that the Working Time Directive does not require voluntary overtime to be considered as part of paid annual leave.

Although not binding, the Tribunal had regard to the Employment Appeal Tribunal’s (EAT) ruling in the aforementioned case of Bear Scotland when making its decision. The Tribunal agreed with the EAT’s interpretation of the law but suggested that this reasoning only applied to overtime that the worker is obliged to do, not the voluntary overtime undertaken by Mr Patterson.

Update

On 17h June 2015, the appeal in Patterson v Castlereagh Borough Council was heard at the Royal Courts of Justice in Belfast and the Judgment was since been published on 26 June. During the appeal hearing, the Judges expressed their surprise at the initial decision and questioned why the Tribunal had assumed that voluntary overtime does not need to be included in paid annual leave. This led the legal representatives of Castlereagh Borough Council to concede that there is “nothing in principle” to prevent voluntary overtime from counting towards holiday pay when appropriate.

Despite the Northern Ireland Court of Appeal (NICA) contesting the Tribunal’s decision, it failed to provide any guidance regarding the methods an employer must use to determine holiday pay. Instead, it emphasised that this was a ‘question of fact‘ for each tribunal to determine and cases should therefore be handled on an individual basis. The case was then remitted for the Tribunal to resolve.

The implications

Even after this development, employers are still unsure as to the rules surrounding the inclusion of voluntary overtime in holiday pay. Furthermore, the decision of NICA is only binding in Northern Ireland and not in the rest of the UK. Nonetheless, NICA decisions are considered persuasive by British courts and tribunals. All UK employers should heed the outcome of this case.

David Ward
Solicitor
Employment team
DWard@LawBlacks.com
0113 227 9262

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