Holiday pay calculations and the inclusion of voluntary overtime

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In addition to the current legislation regarding the calculation of holiday pay, there have been a number of recent court judgments on the topic.

The most recent, only in the last week, was the judgment in Patterson v Castlereagh Borough Council, heard in the Court of Appeal in Northern Ireland. This is a case which looked at whether voluntary overtime, i.e. overtime which the employer is not obliged to provide and the employee is neither obliged to perform, should be included in holiday pay calculations.

It was held in the first instance that voluntary overtime should not be included. However, the case was appealed and, rather unhelpfully, it has been decided that the question of whether voluntary overtime should be included in holiday pay must be determined on a case by case basis.

Unfortunately, the Court of Appeal did not provide guidelines as to the test which would apply and stated that it was a ‘question of fact’ for each tribunal to determine based on ‘the particular circumstances of each case’.

Decisions from the Northern Ireland Court of Appeal are not legally binding on tribunals in England and Wales. However, employers should still be wary of this case as it opens the door for arguments to be raised by employees that voluntary overtime should be factored into holiday pay calculations.

Given the lack of clarity, it is safe to say that this will not be the last case on this topic. For more information on this or any other Employment issue, contact our Employment team.

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