The Employment Appeals Tribunal has confirmed that pay for voluntary overtime normally worked should be included in holiday pay.
In the case of Dudley Metropolitan Borough Council v Mr G. Willetts and others, the respondents were council workers who were Quick Response Operatives including electricians, plumbers and roofers. They worked voluntary paid overtime, standby and call out work in which the EAT said that these additional payments should be included in the calculation of holiday pay. If they weren’t, the impact of this could be that workers may decide not to take their annual leave entitlement as they may be at a disadvantage if the additional payments are excluded from the calculation of holiday pay. The EAT also found a clear link between the payments and the performance of tasks required under their contract.
What businesses need to consider …
• Track and monitor your worker’s overtime and any additional payments you make.
• How often are you paying additional payments?
• Is there a financial detriment on the worker if they go on holiday?
Please note that this ruling only applies to the 20 days holiday as per European Law and not any additional leave 8 days required by UK law for example. That means that employers can pay “basic pay” (without overtime, allowances etc.) only, for 8 days of holiday. This will be an administrative nightmare!
There is also still no determination of the reference period to be used for calculating holiday pay.
If you are concerned what this means for you and the impact it may have on your business please get in touch. Our Employment Law team would be happy to discuss this with you. You can contact us on 0161 478 3800 or on [email protected]
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.