Holiday Pay and Voluntary Overtime – Where Are We Now?

29 June 2015

Author: Leona Rankin
Practice Area: Employment Law

L_rankin

In a previous article that we posted on 5 March 2015, we highlighted the landmark “Bear Scotland” judgment which involved the calculation of holiday pay.  

The judgment made clear that holiday pay should correspond to “normal remuneration”.  This meant that in addition to basic pay, most types of overtime payments must also be taken into account when calculating workers’ holiday pay.  

However, the Bear Scotland judgment left a number of unanswered questions, including whether pay for purely voluntary overtime (which an employee is not obliged to work even if offered by his/her employer) should be included in the calculation of holiday pay. As of Friday we are one step closer to an answer to those questions.

On 17 June 2015, the Northern Ireland Court of Appeal heard the appeal in the case of Patterson v Castlereagh Borough Council and one of the central issues in the case was whether pay received for working voluntary overtime should be counted.

The Court of Appeal gave its judgment on Friday morning and has ruled that, in principle, there is no reason why voluntary overtime cannot constitute part of a "normal" working week (and thus, if that overtime is paid, should count towards “normal remuneration”).   However, the question of what constitutes a "normal" working week is a matter of fact for the Tribunal and should be assessed on a case by case basis over a “reference period”.  The precise reference period has not been identified by the Court of Appeal and the case has been remitted to a fresh industrial tribunal for an assessment of those issues.

Once the employment team has had an opportunity to review the judgment in detail, we will provide a further flash briefing but the direction of travel is becoming clearer: it appears that employers will need to count all types of regularly worked overtime when calculating their workers’ holiday pay.

For further advice on the calculation of holiday pay or any other aspect of employment law, please do not hesitate to contact any member of our employment team at Carson McDowell LLP. 

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