Financial & Legal News

INSIGHT: Employers Advised To Include Voluntary Overtime In Holiday Pay

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Employers are being warned that voluntary overtime should be included in holiday pay calculations, following the recent case of Patterson vs Castlereagh Borough Council.

Voluntary overtime is described as overtime that the employer is not obliged to provide and the employee is neither obliged to perform. In this particular case, Mr Patterson’s employer had ignored the voluntary overtime when calculating his holiday pay.

Initially the industrial tribunal held that the voluntary overtime should not be included in holiday pay calculations, basing their decision on the Bear Scotland case in which the Employment Appeal Tribunal (EAT) decided that voluntary overtime, unlike non-guaranteed overtime, should not be incorporated into the calculation.

However, the decision was appealed to the Northern Ireland Court of Appeal, which held that industrial tribunal’s decision was erroneous. Unfortunately the Court of Appeal didn’t provide any additional guidance to help employers determine how they should calculate holiday pay, stating that the circumstances for each individual case would need to be assessed by the industrial tribunal.

Susan Mayall, head of employment at Pearson, believes this latest case is further evidence that the Courts are finding overtime, whether voluntary or not, should be included.

Susan commented: “While this decision doesn’t give employers any clarity on its application, it paves the way for further cases relating to the inclusion of voluntary overtime in holiday pay calculations.

“However, this does not mean that employers are required to calculate holiday pay to include overtime for all holidays, as bank holidays can be paid at the employee’s basic rate, as can any contractual holidays over and above the standard 20 days.

“The issue these cases raise regarding holiday pay is the need for employers to take advice on how they should be dealt with going forward, in their specific circumstances.”

For advice on voluntary overtime and holiday pay calculations, please contact Susan Mayall on 0161 684 6948 or email susan.mayall@pearsonlegal.co.uk.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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