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The continued holiday pay saga: Voluntary overtime

Regular readers will be aware that the Bear Scotland case gave a sense of security to employers when the Employment Appeals Tribunal (EAT) ruled that non-guaranteed overtime (where the employer is not obliged to provide overtime but the employee is obliged to work it if asked) is required to be paid during annual leave as a form of “normal remuneration”. This impliedly left voluntary overtime (where both the employer and employee are equally not obliged to offer or work overtime if they do not wish to arrange such) out of the holiday pay calculation.

However, this sense of security has been short lived. The fact that the question on voluntary overtime was left unanswered has naturally enticed a future tribunal to include voluntary overtime in the calculation of holiday pay under the Working Time Directive (WTD). This was always going to happen and really it was just a matter of when. 

Patterson v. Castlereagh Borough Council

In Patterson v Castlereagh Borough Council, a case originating in Northern Ireland, the issue at hand was whether the respondent had properly calculated the claimant’s paid annual leave for his casual work and overtime. This matter led to a considerable dispute between the two parties on the proper interpretation of the relevant law concerning holiday pay. 

The claimant, Mr Patterson, was employed under two separate contracts. One was for the position of a Recreation Assistant whilst the other was for the position of an Assistant Plant Manager. As Assistant Plant Manager, Mr Patterson was required to work 37 hours per week. Surplus to this, he undertook voluntary overtime. Ultimately, he submitted a claim for unlawful deduction of his wages in relation to his holiday pay concerning the voluntary overtime undertaken when his employer failed to take it into account in calculating his holiday pay. 

At first instance, Bear Scotland’s implied exclusion of voluntary overtime was upheld, allowing employers to breathe a sigh of relief. However, in June 2015, the case was appealed to the Northern Ireland Court of Appeal (there being no EAT in Northern Ireland) where the case was decided in favour of the employee and it was held that there exists no reason for preventing voluntary overtime from being included in the calculation of statutory holiday pay under the WTD. Although a bold move, it nonetheless left the matter uncertain when it ruled that it is a question of fact for each tribunal in each individual case whether the voluntary overtime may count as “normal remuneration” and hence qualify to be taken into account when calculating pay for annual leave.

Conclusion

It should not be too much of a surprise that the tribunal seized the opportunity to include voluntary overtime in the calculation for statutory holiday pay given the fact that voluntary overtime is much more common than compulsory or non-guaranteed overtime in everyday practice. It is surprising however that little guidance was offered with respect to its application. Further guidance from future case law will be necessary in order for employers in Northern Ireland to adapt their policies in line with the new rule. 

Employers in England and Wales should not presume they have escaped the clutches of this verdict. The above case has forced the door wide open to the inclusion of voluntary overtime. Even though the Northern Ireland Court of Appeal has little binding force on the English and Welsh courts and tribunals, it is highly important that employers are conscious of the potential effects of this decision as a strongly persuasive authority which could have a strong bearing upon the upcoming decisions in the employment tribunals in England and Wales.

As always if I can provide you with any further assistance in relation to holiday pay issues or any other employment law matter please do not hesitate to contact me for a free consultation on 0113 350 4030 or samira.cakali@scesolicitors.co.uk.


Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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