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Case law: Employers may have to take wholly voluntary working into account when calculating holiday pay

Employers should consider whether to include wholly voluntary overtime, and standby and call-out payments when calculating employees' annual holiday pay, following a recent ruling.

Legal Alert

This update was published in Legal Alert - June 2016

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.

A local authority invited tradesmen working on its housing stock to do voluntary overtime on Saturdays. All voluntarily agreed to work 9 to 5 on Saturdays and to be on a standby rota at night and at weekends to deal with emergencies and repairs

This arrangement became part of their regular work pattern. Several years later, they claimed that the calculation of their holiday pay should include this voluntary work because it was so regular that it amounted to part of their 'normal' work.

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. However, there has not been any legal ruling on whether wholly voluntary overtime or other work should be taken into account.

Then in 2015, the Northern Ireland Court of Appeal ruled 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. Northern Irish cases are not directly binding on courts in England & Wales - but the judge in this latest case took that ruling into account.

He said that the voluntary overtime, voluntary standby and voluntary call-out payments in this case were 'normal' pay because the relevant work was carried out with 'sufficient regularity', and should therefore be taken into account when calculating holiday pay.

Operative date

  • Now

Recommendations

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

Case ref: White & Others v Dudley Metropolitan Borough Council [2016] 1300537/2015

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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