Covid-19

Coronavirus: Employer’s resource centre — live guidance available here

Newsroom

EAT confirms that regular voluntary overtime should be included in Holiday Pay

SR
Employment Law & HR
BG Purple

Note: this article was first written by our colleagues at Solve HR, before Solve HR joined Law At Work in March 2020. We have imported this...

The Employment Appeal Tribunal (EAT) upheld the decision of Employment Tribunals that payments for voluntary overtime should be included in holiday pay if they are regular enough to constitute 'normal pay'. The Employment Tribunal accepted that employees could '"drop on and off the rotas to suit themselves whether day by day, week by week, month by month or permanently'" and additional work was '"almost entirely at the whim of the employee, with no right to enforce work on the part of the employer'". In the case of Dudley Metropolitan Borough Council v Willetts and others, an Employment Tribunal decided that out of hour's standby pay, call out allowance, voluntary overtime and travel allowance linked to those elements should be included within holiday pay calculations. The 56 council workers argued that their holiday pay should have included, payments for voluntary overtime. The tribunal stressed that '"normal pay'" must be included in holiday pay and concluded that the council workers' voluntary overtime payments are sufficiently regular to constitute '"normal pay'". The EAT confirmed that, where the pattern of work extends for a sufficient period of time on a recurring basis to justify the description '"normal'", voluntary overtime pay must be included in holiday pay, however, each case must be decided on its own merits, and it is up to individual Employment Tribunals to determine whether or not the overtime payments are sufficiently '"regular and settled'" to require inclusion in holiday pay. The impact of the decision will be felt by all employers who operate overtime payments and approaches to calculating holiday may need to be reassessed once again. The individual circumstances that apply to your workforce and your business will ultimately govern what approach is best for you, therefore before making any decisions as to the risks you face, take advice on what it might mean for you and your staff.

About us

As trusted experts in employment law, HR and health & safety, we offer a range of flexible employee relations services under one roof. By delivering top quality, all-inclusive fixed-fee advice, we enable employers to take quick, confident and decisive action.
 

Read more

Areas of Expertise

Employment Law

Find out more

HR Consultancy

Find out more 

Health & Safety

Find out more