Numerous employment tribunal cases have challenged the widely accepted and longstanding idea that employees with regular working hours should not have variable payments included in any holiday pay calculations. In Bear Scotland v Fulton, the EAT was given the daunting task of hearing the evidence, to make a final decision on the subject. The EAT confirmed in this case that non-guaranteed overtime should be included in holiday pay, but did not provide any ruling that could apply to voluntary overtime. White v Dudley Metropolitan Borough Council helped provide some clarity on this pressing issue.
Voluntary overtime is best defined as work an employee can technically refuse and work the employer isn’t obligated to offer. Non-guaranteed overtime is work the employer does not have to provide but employees are obligated to work if required.
White v Dudley (2016) was based around 56 employees who were working on repairing and maintaining the local authority’s social housing. These employees had the option of working additional time on Saturdays, but could also choose to go on standby every four weeks to deal with emergency callouts and repairs. When it came to pay, the local authority calculated their holiday pay based on their basic pay alone. Were these hours being worked during on-call rotation and voluntary overtime considered ‘normal pay’? It turns out, yes. The employment judge ended up ruling that since the hours worked became part of the normal workweek, it should be reflected in their holiday pay based on time period and regularity.
Whilst a ruling was made here and while there is a little bit more clarity surrounding this issue, human resource experts are urging the court to determine what can be considered “regular” since it would factor into “normal pay”. In this particular case, working Saturdays or working on-call was easily proven to a regular occurrence. In other cases, however, it may not be as black and white.
HR experts feel that after this landmark win employees will feel liberated and be more prone to challenging their organisations. The problem is that regularity has yet to be defined. Additionally, human resource professionals feel as though a blanket rule cannot even be applied to determine regularity, since each business in each sector operates differently.
The possibility of an appeal is still imminent and employers are all waiting with bated breath to see how this will truly pan out. In the meantime, clarity from the EAT certainly wouldn’t hurt as it will be hard for businesses to protect themselves if there isn’t a clear understanding of the rules.
