Latest ruling on voluntary overtime and holiday pay

2015-06-29 Philip posted:

Should employers include voluntary overtime when calculating holiday pay?

In late 2015 the Employment Appeal Tribunal ruled regular non-guaranteed overtime (where an employer is not obliged to offer overtime but the employee is required to work it if offered) should be included when calculating holiday pay. That particular case didn’t address whether purely voluntary overtime (where an employer is not obliged to offer overtime and, if offered, the worker is not required to work it) should be included in the calculation too.

The issue has partly been settled by the Northern Ireland Court of Appeal in Patterson v Castlereagh Borough Council. Mr Patterson’s overtime was entirely voluntary: he was not obliged to work it when offered, nor was his employer obliged to offer any. The Claimant did occasionally work overtime which his employer ignored when calculating his holiday pay. The Claimant brought a claim for arrears of holiday pay.

Mr Patterson won his appeal. The Court of Appeal stated there is no reason in principle why voluntary overtime should not be included in holiday pay calculations. However, it goes on to stress that it will be a question of fact for each tribunal to determine whether or not the voluntary overtime includes the necessary features to be included: the overtime must normally be carried out by the employee, and be an “appropriately permanent feature” of the employee’s remuneration to trigger its inclusion in the holiday pay calculation.

As it is a Northern Ireland case, this decision is not binding on courts and tribunals in the rest of the UK. However, it will be cited in holiday pay cases and may be persuasive.

Whether voluntary overtime pay is to be part of holiday pay is a question of fact in each case. If you would like advice about overtime and holiday pay, please contact us by email or telephone us on 01225 632240.

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