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Case law: Employers may have to take purely voluntary overtime into account when calculating holiday pay

Employers should consider whether to include wholly voluntary overtime when calculating employees’ annual holiday pay, following a Northern Irish legal ruling.

Legal Alert

This update was published in Legal Alert – August 2015

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

An engineer worked for a Northern Irish local authority. The local authority was not obliged to offer him overtime and, if it did, he was not obliged to accept it – it was purely voluntary. He claimed that purely voluntary overtime should be taken into account when calculating his annual holiday pay.

The law in England & Wales says that regular, but non-guaranteed, overtime should be taken into account if employees are required to undertake it when asked, but there has been no legal ruling on whether wholly voluntary overtime should be taken into account.

However, the Northern Ireland Court of Appeal found that there is ‘nothing in principle’ to stop wholly voluntary overtime from being included in holiday pay – it will depend on factors such as the regularity and permanence of the overtime arrangements. The dispute has been sent back to the Tribunal to decide if the overtime should be taken into account in the circumstances.

Rulings of the NI Court of Appeal are not directly binding on courts in England & Wales but may be taken into account if similar case arises here.

Operative date

  • Now

Recommendations

  • Employers should consider whether to include purely voluntary overtime when calculating employees’ annual holiday pay, depending on the regularity or permanence of their overtime arrangements.

Case ref: Patterson v Castlereagh Borough Council NIIT/1793/13

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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