Voluntary Overtime and Holiday Implications

Earlier this month the Employment Appeal Tribunal (EAT) heard a case that will affect thousands of employers when it comes to calculating holiday pay.

The case in question was: Dudley Metropolitan Borough Council v Willetts (and others)

56 employees brought a joint claim against the council in respect of voluntary overtime not being included in their holiday pay, which they claimed was against the Working Time Regulations 1988. These employees worked set hours per week which constituted their normal working hours however, once every 4 or 5 weeks they participated in a call-out register and worked voluntary hours. 

Their claim was successful as the tribunal didn’t consider the overtime to be ad hoc or irregular; which is still excluded from holiday pay, but instead would form part of their normal working hours. The EAT specified that overtime that ‘extends for a sufficient period of time on a regular and/or recurring basis’ and has become part of the worker’s normal pay must be included [in holiday pay]. This also means that regular overtime worked at certain times of the year, for example over the festive period should be taken into account for holiday pay.

There isn’t a statutory definition of ‘normal pay’ and what amounts to it, however this case will be binding on employment tribunals. Therefore employers may have to provide a satisfactory argument as to why any overtime undertaken by their employees isn’t considered part of their normal pay, in order to have a tribunal decision awarded in their favour.

If you are concerned whether or not the overtime worked by your employees should be considered as part of their normal pay, or for advice on any other employment matters, please contact the employment team on 01302 341 344.

By Kris Kerins BSc (Hons) PGC (Tech Mgmt) – Risk Services Adviser

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