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Holiday pay - the story continues

Posted on 22nd September 2016
Case law

An employment tribunal has concluded that voluntary overtime payments to certain employees should be included in the calculation of holiday pay.

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employees who worked overtime regularly, even though voluntarily, should have four weeks' holiday pay calculated to include these overtime payments. The payments were sufficiently regular to be considered part of their 'normal' pay

Brettle v Dudley Metropolitan Borough Council [ET] 2016

Facts

This case concerned five employees employed by Dudley MBC in various roles and who received various payments for being on call and when called out in addition to overtime payments and basic pay.  

The employees volunteered to be on the 'on call roster' and had carried out on call duties for a number of years. They could come off the on call roster but when on call had to attend any emergency that arose. They were on call either 1 week in 4 or 1 week in 5.  They received a payment for being on call, being called out and, in some instances, a travel allowance which exceeded the costs incurred when travelling for work.  Part or all of the travel payment was taxed.

In addition, some of the employees worked overtime but were not required to under the terms of their employment.  Overtime ranged from 1 or 2 additional hours per week to one day per week to 'very rare'.  There were no ramifications if the employees did not work this overtime.

Decision

The employment tribunal:
  • considered various payments made to the five employees and, following earlier case law, decided that out of hours standby payments, call out allowances and taxable elements of travel allowances which exceeded actual costs incurred were all part of a week's pay and should be included in the calculation of four weeks' holiday pay. 
  • decided that the employees who worked overtime regularly, even though voluntarily, should have four weeks' holiday pay calculated to include these overtime payments.  The payments were sufficiently regular to be considered part of their 'normal' pay.  The employee who worked overtime 'very rarely' should not as the payments were not part of 'normal' pay.  
  • commented, again, that holiday was provided for health and safety reasons and that failing to pay a worker pay they 'receive consistently and regularly' could deter them taking that leave.

Comment

The decision of the employment tribunal is fact specific and not binding on other employment tribunals.  It is not, however, a suprising or unexpected decision and is a clear indication of the direction of travel for the calculation of holiday pay.

If your organisation pays any overtime (or any of other payments) you should seek specialist legal advice on whether the payments should be included in the calculation of holiday pay.  You can read more about the case law surrounding the calculation of holiday pay here.  

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