Overtime and Holiday pay

Overtime and Holiday Pay

| Published on September 19, 2016

Overtime Pay and Holiday Pay Rate

In Brettle v Dudley Metropolitan Borough Council ET/1300537/15, the Employment Appeal Tribunal (the “Tribunal”) considered whether voluntary overtime should be included in the calculation of statutory holiday pay.

This case was brought in respect of unlawful deductions from wages by five lead claimants concerning 56 employees who carried out housing repairs for Dudley Metropolitan Borough Council. While the employees had received holiday pay, they argued that they had not received the correct rate. In particular, they argued it should have included an amount in respect of voluntary overtime, voluntary standby allowances, voluntary call-out payments and mileage payments.

The five employees worked different shift patterns, with different degrees of regularity to the overtime worked. One employee worked voluntary overtime every one in four weeks, another every one in five, another more rarely. They participated in rotas including times when they had to be on standby for call-outs.

In order to reach its decision the Tribunal considered the Working Time Directive and Working Time Regulations 1998. Under this legislation, workers are entitled to be paid at the rate of a ‘normal weeks pay’ for each week of holiday. What amounts to a normal weeks pay is calculated in accordance with the Employment Rights Act 1996 under which a distinction is made between employees with ‘normal’ and ‘not normal’ working hours.

The Judgment confirmed that regular voluntary overtime (which is not occasional, unusual, rare or ancillary) can be considered ‘normal pay’ for the purposes of calculating holiday pay. Each case will turn on its facts. Amongst the claimants, not all were successful, as they were not able to demonstrate the payments formed part of their own normal remuneration.

It will be for employers to decide whether to take a risk-averse approach and include such voluntary payments in their calculations going forward or wait for this issue to be decided at a higher level in the Tribunal.

Natasha Cross – September 2016

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