An important decision by the Employment Appeals Tribunal (EAT) regarding holiday pay for employees who regularly work voluntary overtime beyond their contracted hours, could have massive implications for UK businesses.
The EAT recently heard a case concerning Dudley Metropolitan Borough Council v Willetts (and others) where they upheld a previously made decision that voluntary overtime worked for a sufficient period of time on a regular and/or recurring basis should be included in the first four weeks’ paid holiday.
Holiday pay claims had been brought against the Council by a group of 56 employees responsible for the repair and maintenance of council houses. These employees normally worked 37 hours per week but once in every four or five weeks, they were on an ‘on call’ register and they worked additional voluntary hours. However, these voluntary payments had been excluded from their holiday pay and the workers argument was that this was contrary to the Working Time Regulations 1988 (WTRs).
When their initial claim was successful, Dudley Metropolitan Borough Council appealed to the EAT. On upholding the earlier decision, the EAT referred to previous ECJ decisions which had stressed that all workers should receive their ‘normal remuneration’ when they take a holiday. They should not be discouraged from implementing their right to take paid annual leave – and any decrease in their salary is presumed to be a deterrent.
The case was sent back to the Tribunal to determine whether or not Mr Willett and his co-workers had been underpaid their holiday pay.
Glenn Hayes of Irwin Mitchell stated, “This decision is extremely important and it is the first occasion the EAT has heard cases relating to purely voluntary overtime. Many businesses have adopted a ‘wait and see’ approach to voluntary overtime but this option is no longer possible and overtime that is worked regularly, must now be included in holiday pay.
“Not all voluntary overtime will have to be included but the EAT made it clear that overtime that ‘extends for a sufficient period of time on a regular or recurring basis’ will.
“There is no statutory definition of what amounts to ‘normal pay’ and Tribunals will continue to hear arguments about whether overtime, of whatever nature, has become part of an employee’s normal pay.”
