09th October 2016

Should Voluntary Overtime Be Included in Calculation of Statutory Holiday Pay

Daily time record with blank payroll time sheetFollowing the recent case of Brettle v Dudley Metropolitan Borough Council ET/1300537/15 an Employment Tribunal held that voluntary overtime and other associated payments, could be included in the calculation of statutory holiday pay. Note: This is a Tribunal decision only and therefore is non-binding.

Background

Following a multiple claim for unlawful deduction from wages, compromising of 5 different lead Claimants working various shift patterns, it was submitted that whilst employees had received holiday pay, this had not been calculated at the correct rate. The crux of the Claimant’s submissions was that the calculation should have reflected the voluntary overtime, voluntary standby allowances, voluntary call-out payments (and mileage payments).

The Tribunal was therefore required to determine whether:

  • These payments should form part of the holiday pay calculation;
  • In the alternative were the additional payments part of “normal pay” as a result of an implied term of the contract;
  • The payments attracted regulation 13 and 13A leave, or only regulation 13 leave.

Notably the lead Claimants worked a variety of different shifts, namely:

  • Worked overtime every 1 in 4 weeks;
  • Worked overtime every 1 in 5 weeks;
  • Worked overtime on a sporadic basis; and
  • Undertook standby and call out duties.

Decision

Although the Tribunal considered Lock, Bear, Williams and Patterson, it held that these payments could not be construed as “normal pay.” Nevertheless, it was determined that an employee should not be discouraged from taking annual leave due to the pay they will receive for this period. As a result, the Tribunal concluded:

  • Where voluntary overtime was intrinsically linked to the work required to be done under the contract (in this case once an employee’s name was placed onto the rota they were committed to that work) then this should be included within the calculation;
  • Where overtime was regularly worked, this was included in the calculation;
  • Where overtime was sporadic/rare, it was held that this should not be included in the calculation;
  • The voluntary payments should only be factored in the calculation of holiday pay for Regulation 13 leave. holh

Advice

Notably this is a non-binding Tribunal decision and therefore has limited value at this juncture, however Employers should be mindful not to be dismissive of its decision. The case demonstrates a diversion in how Tribunal’s may assess these types of claims. It will be worth continuing to follow this matter as it is anticipated that a decision will also be made regarding quantum, in particular how a series of deductions will take effect.

*All information is correct at the time of publishing

Julie Duane

Napthens LLP – Employment Law Advocate

Julie is one of our Employment Law Specialists from Napthens Solicitors. Read more

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